12 Major Necessity For Trade

• Tariff

• Quota

• Subsidy

• Embargo

• Sanction

• Dumping

• Customs Duty

• Exchange Rate

• Trade Deficit And Surplus

• Protectionism

• Free Trade Agreement

Tariff

• Tariff is charged for import and export

• Tariff is charged for protection of domestic market and make foreign goods more costlier

• There are 2 types of tariff, one is charged based on percentage while other on a ratio with specific amount of goods produced

Quota

• Quota is a limitation put of the export or import of goods

• Quota is usually put on goods or service to save the domestic market or equalize trade

Subsidy

• A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut

• Governments goal to provide subsidy is to achieve certain economic or social activity

Embargo

• Embargo is a trade restriction given by the government to restrict certain trades

• Embargo can be charged due to trade issues, political issues, certain actions that disturb the country or its trade, that is why embargo is charged

Sanction

• Sanction is similar to embargo, sanctions are to pressurize a country into changing there actions

• Sanctions are also charged due to unfair actions, trade issue or other problems

Dumping

• Dumping in trade occurs when a company exports a product to a foreign market at a price lower than its normal value

• Dumping usually occurs to gain a competitive advantage in the international market

Customs Duty

• Customs duty refers to the tax imposed on goods when they are transported across international borders

• Customs duty is to make trades more valuable and make it more advancing for the government as a source of taxation

Exchange Rate

• The value of one currency in terms of another. Affects import/export costs.

  • Weak currency → exports become cheaper

  • Strong currency → imports become cheaper

Trade Deficit And Surplus

• Deficit is when the import is more than exports leading to loan and negative currency

• In simple words deficit is the amount of money that is less than required

• Surplus is when the amount of money is more than required

• Surplus is the main goal of trading

Protectionism And Free Trade Agreement

• Protectionism is an economic policy where a country restricts international trade to protect domestic industries from foreign competition

• Free trade agreement is a agreement between two countries depending on their relation two free trade, mostly taxes would be less and there will be more trades