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How do international sanctions, tariffs, quotas, and trade restrictions affect international trade and costs of production?

How do tariffs and sanctions on the import of auto engines into the U.S. affect production?

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This posting demonstrates the function of international sanctions, tariffs, quotas, and trade restrictions.

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How do international sanctions, tariffs, quotas, and trade restrictions affect international trade and costs of production?

International sanctions, tariffs and other trade restrictions are generally used to protect domestic industries and jobs and reduce the dependency on foreign products. For example U.S may order ships to be manufactured in a foreign country and buys from that nation because they can be built cheaper. On the other hand it cannot let its own shipbuilding industry die and the workers lose their jobs. So U.S uses quotas to limit the number of ships imported and make the market less attractive for foreign builders with the help of tariffs. It is important to protect core industries however a nation should not increase the number trade restrictions because protectionism is very expensive. Trade barriers generally result with higher prices for consumers and decrease the variety of ...

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Umut Oltulu, MBA
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  • MBA, Texas A&M University-Kingsville
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