Question

mentoring moment: barriers to international trade
governments can affect international business in many ways. youve just seen how a subsidy can negatively impact the price of your solar kits versus those produced by domestic firms. but subsidies arent the only way that governments can set conditions for doing business within their borders and even prohibit doing business altogether.
tariffs are taxes on imports. these taxes make the imported good more expensive, giving a domestic producer a better chance at competing with the foreign producer. for example, india might impose a 15% tariff on imported solar kits. this would make your product more expensive for indian consumers.
quotas put a physical limit on the quantity of a good that can be imported into a country in a given period of time. this leads to a reduction in the quantity imported and increases the market price, benefiting a domestic producer.
embargos are government orders forbidding exportation or importation of a particular product -- or even all products -- from a specific country. for example, in 2015 russia placed an embargo on european pork over concerns about african swine fever in european wild boar.
local content laws are requirements that products sold in a country must be at least partly made there.
business practice laws encompass the regulations, policies, and procedures through which host countries govern business practices in their jurisdiction. governments can make it easy to do business internationally, or they can impose layer upon layer of bureaucracy and incomprehensible rules to restrain trade.
think youve got it?
drag and drop each example below to an appropriate category box, and click submit. (note: these examples are fictional.)
tariff type
quota type
embargo type
the u.s. allows the import of no more than 1.23 million tons of sugar each year.
the government of haiti supplements the income of farmers of agricultural commodities such as wheat, grain, and cotton.
russia places a complete restriction on the importation of fish from norway.
vietnam restricts the import of rice to 350,000 metric tons per year.
japan announces an import tax of 15% on u.s.-made vehicles.

Explanation:

• Tariff Type: A tariff is a tax on imports. Japan announcing a 15% import tax on U.S.-made vehicles fits this as it's a tax on imported goods.
• Quota Type: A quota is a physical limit on the quantity of a good imported. The U.S. limiting sugar imports to 1.23 million tons and Vietnam limiting rice imports to 350,000 metric tons per year are quantity limits.
• Embargo Type: An embargo is a complete restriction on export/import of a product from a country. Russia completely restricting fish imports from Norway fits this. The Haiti example is a subsidy (not a trade barrier type here), so it's not placed in these categories.

Answer:

• Tariff Type: Japan announces an import tax of 15% on U.S.-made vehicles.
• Quota Type: The U.S. allows the import of no more than 1.23 million tons of sugar each year; Vietnam restricts the import of rice to 350,000 metric tons per year.
• Embargo Type: Russia places a complete restriction on the importation of fish from Norway.