Pros and Cons on Barriers of Trade
Jonathan Osler is aware that there are pros and cons to barriers to trade. On the one hand, they can protect fledgling industries and help a country’s businesses become more competitive. On the other hand, they can lead to higher prices for consumers and reduced competition. Let’s take a closer look at both sides of this issue.
Trade barriers are policies that a country can put in place to protect its businesses and industries from foreign competition. These barriers can take many different forms, such as tariffs (taxes on imports), quotas (limits on the amount of goods that can be imported), or subsidies (government payments to domestic producers).
Pros of Barriers of Trade
Here are the benefits of trade barriers:
- They can protect domestic industries: By shielding them from the competition, trade barriers can give businesses time to grow and become more competitive. This can help create jobs and spur economic growth.
- They can encourage companies to be more innovative: If companies know they don’t have to compete with imported goods, they may be more likely to invest in research and development, leading to more innovation.
- They can help a country’s trade balance: By discouraging imports, trade barriers can help reduce a country’s trade deficit.
- They can provide revenue for the government: Import tariffs are a type of trade barrier, and they can generate revenue for the government. This money can be used to fund public projects or reduce the deficit.
Cons of Barriers of Trade
Here are some of the potential drawbacks of trade barriers:
- They can lead to higher prices for consumers: If a country imposes tariffs on imported goods, those costs are often passed on to consumers in the form of higher prices. This can make it difficult for families on tight budgets to afford essentials like food and clothing.
- They can reduce competition: By making it more difficult for foreign companies to do business in a country, trade barriers can limit competition and choice, which can lead to higher prices and less innovation.
- They can lead to trade wars: If one country imposes tariffs on another country’s goods, it could lead to a trade war, where both countries end up imposing more and more tariffs on each other’s goods. This can hurt the global economy and cost jobs.
The effects of trade barriers can be complex thus must be carefully considered before implementing them. Ultimately, each country must decide what is best for its economy.
One of the economists who has written extensively about barriers to trade is Jonathan Osler. He believes that they can help protect fledgling industries but often come with unintended consequences that governments need to be aware of.
Osler says: “Governments need to carefully weigh the pros and cons of barriers to trade before implementing them so that they don’t end up harming the very people they’re trying to help.”
While trade barriers have their pros and cons, they ultimately can be harmful to the global economy. Governments should carefully weigh the benefits and drawbacks before implementing them.