MGT 250 Lecture Notes - Lecture 23: Voluntary Export Restraints, Direct Tax, Protectionism
18 May 2018
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• Global Management:
➢ Trade Barriers: gov't-imposed regulations that increase cost & restrict
number of imported goods.
o EX: Mexican government adds a 25% tariff to clothes, textiles, & footwear
imported to Mexico.
➢ Protectionism: gov’ts use of trade barriers to shield domestic companies &
workers from foreign competition.
o Governments have used 2 general kinds of trade barriers.
▪ Tariff: a direct tax on imported goods.
❖ Increase cost of imported goods relative to that of domestic goods.
❖ Countries place tariffs on exports to discourage manufacturers
from sending domestically produced goods overseas.
▪ Nontariff: nontax methods of increasing cost or reducing volume of
imported goods.
❖ There are 5 types of nontariff barriers:
1. Quotas: specific limits on number/volume of imported
products.
2. Voluntary Export Restraints: limit amount of a product that
can be imported annually.
3. Government Import Standards: established to protect health
& safety of citizens.
4. Subsidies: long-term, low-interest loans, cash grants, & tax
deferments, to develop & protect companies in special
industries.
5. Customs Classification: assigned to imported products by
gov’t officials that affect size of the tariff & imposition of import
quotas.
• Trade Agreements:
find more resources at oneclass.com
find more resources at oneclass.com
