Globalisation & Trade Restrictions
International Trade & Globalisation · 2 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 6% of your exam marks.
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 that are over-consumed because consumers underestimate the harm they cause, such as narcotics, tobacco or alcohol. An embargo bans them outright, while a high tariff simply makes them dearer.
- Promote environmental sustainability. Restrictions can discourage imports produced in damaging ways or with high transport emissions.
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.