Reasons for Trade Restrictions — Globalisation & Trade Restrictions | IGCSE Economics

Exam Frequency Analysis

Past paper frequency (2018 to 2024)

This topic accounts for approximately 6% of your exam marks.

new

Low

New6%

New emphasis in the 2027 syllabus; globalisation, multinational companies and trade restrictions are now grouped as a distinct topic. Guidance based on specimen materials.

Governments give several reasons for restricting imports.

Protect infant (sunrise) industries. New industries may be too small to compete with established foreign rivals; temporary protection lets them grow.
Protect declining (sunset) industries. Slowing the decline of an old industry gives workers and the area time to adjust and avoids a sudden rise in unemployment.
Protect strategic industries. A country may want to keep the ability to produce essentials such as food, energy or defence equipment in case trade is cut off.
Avoid . If foreign firms sell below cost to drive out domestic competitors, a tariff can restore fair competition.
Reduce a current-account deficit. Cutting imports narrows a trade deficit, at least until trading partners retaliate.
Raise tax revenue. Tariffs generate revenue, which matters most for governments with limited other ways to collect tax.
Restrict the import of demerit goods. Barriers can reduce imports of goods judged harmful, such as certain drugs or low-quality products.
Promote environmental sustainability. Restrictions can discourage imports produced in damaging ways or with high transport emissions.

Exam tip

Analyse the reasons for imposing tariffs (6 marks)

What comes up: a 6-mark "Analyse the reasons for imposing tariffs on imports." Each chain identifies a reason (1) and develops how the tariff achieves it (1).

Write: develop two or three chains, for example: (1) to protect domestic or infant industries (1): a tariff raises the price of competing imports, so consumers switch to domestic goods, giving home firms market share and time to grow (1); (2) to improve the current account (1): dearer imports reduce import spending, raising net exports and narrowing a trade deficit (1); (3) to raise government revenue (1): unlike a quota, a tariff is a tax that generates receipts the government can spend (1); (4) to prevent dumping (1): a tariff offsets the artificially low price of imports sold below cost, protecting domestic firms from unfair competition (1).

Watch out: push each point to the "because…" step. Listing reasons without explaining the mechanism is capped at the lower marks.