While hte theories of absoute and comparative advantage are strong forces for encouraging world trade,other factors create trade barriers between nations.Officials estimate that about half of world trade is restricted by tariffs,quotas ,and other barriers.
A tariff is a tas or duty levied on commodities when they cross national boundaries.It is the mosst common method of restricting trade,Tariffs may be placed on both exports and imports ,but most nations impose tariffs onlu on imports because they want to encourage exports.Import tariffs can be specific ,advalorem ,or a combination of the two ---compound. Specific duties relate to some particular physical measurement such as dollars per pound ,yerd,or barrel.Ad valorem taxes are figured on the value of goods .Compound duties combine these approaches as a basisfor taxation.Tariffs are flexible because governments can apply them to specific countries or commodities for which they think trade should be restricted,But once tariffs are estabished dpolitical pressures may make them difficult to change .Tariffs almost always result in higher prices to th ultimate consumer .Many European countries ,for instance ,place tariffs of 12% to 19%on fertilizer from the Untied States .claiming that the United States is dumpimg excess fertilizer in Europe ,Japan,a big exporting nation,faces tariffs on their outbound motors in Australia .Australians ,meanwhile ,say that Japan is flooding their markets.
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