What is a non-tariff barrier?

A non-tariff barrier refers to any restriction on international trade that does not involve tariffs or taxes on imports or exports. These barriers can take many forms, including quotas, import licenses, standards for products, and regulations that effectively limit trade without using a tax approach. They can impede the flow of goods and services across borders and can be used to protect domestic industries from foreign competition or to influence trade patterns.

The key aspect of non-tariff barriers is that they create obstacles to trade that are not directly linked to pricing mechanisms like tariffs. For instance, strict health and safety regulations might prevent certain products from being imported, even if there is no tariff imposed on those products. This differentiation makes the concept of non-tariff barriers significant in understanding global trade dynamics.

In contrast, other options like a tax on exported items, a government subsidy for exporters, or an increase in import duties are all related to direct financial implications on trade but do not encompass the broader category of trade restrictions that non-tariff barriers represent. Therefore, the essence of non-tariff barriers lies in their function as regulatory measures that impact trade without involving tariff structures.