Why are there trade barriers in place?

Answer 1

Trade barriers (such as quotas and tariffs) among countries serve multiple purposes.

For one they serve domestic economic interests. A nation could have young domestic industries that they would like to expand. These young domestic industries cannot compete with developed industries in foreign countries. For example, if Mexico wanted to develop its own steel industry trade barriers would be a wise choice. The young Mexican steel companies cannot produce steel as efficiently and cost-effectively as the dominant steel industries of the United States or Japan. Therefore by imposing tariffs on foreign steel, thus raising the price of foreign steel, the Mexican steel companies can compete with foreign companies.

Trade barriers may also serve political purposes. A point of contention between the United States and China is the belief that China has been purposely devaluing its currency. This makes Chinese goods unfairly cheap, some would argue. Therefore the United States House passed a bill imposing a possible tariff on some Chinese goods. Politically, trade barriers can also make statements such as against Iran's nuclear program. Many nations have imposed trade barriers against Iran to try to persuade them to listen to international nuclear demands.