Kapokloog Supply Chain Knowledge What is Customs Barrier ?

Kapokloog Supply Chain Knowledge What is Customs Barrier ?

 

What Is a Customs Barrier?

A customs barrier is any implementation of fees, rules, or regulations designed with the intention to limit international trade.

 

Key Takeaways

A customs barrier is any implementation of fees, rules, or regulations designed with the intention to limit international trade.

Restrictions can come in the form of tariffs, levies, duties, trade embargoes, and even currency manipulation.

Customs barriers may be put in place by governments who are looking to give an advantage to a domestic industry over foreign competitors.

 

How a Customs Barrier Works

A customs barrier-also called a trade barrier-acts to limit trade across borders by creating and enforcing various restrictions. These restrictions can come in the form of tariffs, levies, duties, and trade embargoes. All customs barriers are put in place in order to discourage trade.

Additional types of customs barriers include the use of import and export licenses, quotas, and subsidies. In some cases, changes in a country's currency price can be used as a customs barrier or form of trade limitation.

 

Customs barriers may be put in place by governments who are looking to give an advantage to a domestic industry over that of a foreign competitor. In some instances, these levies are put in place to limit exports of goods and services that may be vital to the local economy. Customs barriers may also be put into place in response to undesirable actions by other nations.

 

Many economists feel that these customs barriers should only be used as a last resort because they may create hostile trade environments. However, the prevailing opinion is that there are valid reasons to implement customs barriers. Whether it's to protect an emerging domestic industry or a tactical strategy for engaging in a trade war, customs barriers play an important role in international trading.

 

Example of Customs Barriers

In 2018, the United States, under President Donald Trump, began imposing numerous new tariffs on steel, aluminum, and a variety of other goods from China in response to concerns about national security and intellectual property theft.1 In response, China placed retaliatory tariffs on goods from the United States.

 

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