discusses a barrier to trade and explains at least one negative side effect of the barrier they have described and how that side effect can impact society as a whole.
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#1Businesses engaged in international trade must comply with protectionist policies that safeguard domestic producers and workers from foreign competitors. Non-tariff barriers are a form of protectionism that involves methods like rules, regulations, inspections, and paperwork used by a country to raise the costs or challenges of importing goods. (Shapiro, pg. 473/ Chapter 20.1). A historical example of a non-tariff trade barrier is Chinas restriction on rare-earth mineral exports between 2010 and 2014. China produces approximately 70% of the world’s rare earth minerals and processes nearly 90% of them. Rare earth elements are essential for electronics, renewable energy, and defense systems. (MSN.com). During this time, China introduced export quotas, licensing requirements, and administrative restrictions, greatly limiting the availability of rare earth materials to international buyers.
This policy was mainly aimed at conserving natural resources and safeguarding Chinas internal supply. It also sought to bolster Chinas manufacturing industry by giving local companies priority access to key materials. By restricting exports, China aimed to promote industrial growth and preserve its strategic influence in global tech markets.
However, the policy created several historic negative externalities. Global prices for rare earth minerals spiked, raising production costs for electronics manufacturers worldwide. Many foreign companies experienced supply chain disruptions and uncertainty. The restrictions also heightened trade tensions, prompting the United States, the European Union, and Japan to file complaints with the World Trade Organization. In 2014, the WTO determined that Chinas export restrictions breached international trade rules.
Although the policy was intended to shield domestic industries and conserve resources, it ended up distorting international markets and increasing geopolitical tensions. This example demonstrates how non-tariff barriers can lead to substantial unintended effects beyond their initial economic goals.
Works Cited
MSN. www.msn.com/en-in/news/world/china-tightens-grip-on-rare-earth-metals-to-counter-us-led-push-to-end-its-monopoly/ar-AA1WdxsV?ocid=BingNewsSerp. Accessed 25 Feb. 2026.
Shapiro et al. 20.1 Protectionism: An Indirect Subsidy From Consumers To Producers – Principles Of Microeconomics 3e | OpenStax. 14 Dec. 2022,openstax.org/books/principles-microeconomics-3e/pages/20-1-protectionism-an-indirect-subsidy-from-consumers-to-producers. Accessed 25 Feb. 2026.
#2A historic barrier to trade that is not a tariff is the voluntary export restraint also known as the VER. This was negotiated in 1981 between the United States and Japan. This limited the Japanese automobile exports. In 1981, President Ronald Reagan negotiated an export that would limit the Japanese automobile exports into the United States. According to the article “Japan agreed to limit its auto exports to the United States to 1.68 million, the level from 1979, for three years beginning in 1981. It was the economic equivalent of an import quota” (King and Vaughn). This policy was used as a quantity restriction, which made it a form of protectionism.
The textbook explains that the term protectionist policies involve trade-offs. According to the textbook “Protectionism certainly saves jobs in the specific industry being protected but, for two reasons, it costs jobs in other unprotected industries” (Shapiro et al., Ch. 20.2). This demonstrates that the domestic automakers can benefit from this, while other industries suffer major job losses. The textbook further states that, “The hidden opportunity cost of using protectionism to save jobs in one industry is jobs sacrificed in other industries” (Shapiro et al., Ch. 20.2). Protectionism cannot increase the total employment because “Protectionism reshuffles jobs from industries without import protections to industries that are protected from imports, but it does not create more jobs” (Shapiro et al., Ch. 20.2).
This leads back to the limiting of Japanese automobile exports in the United States. The policy that was created reduced the competition in car market, which allowed them to raise the prices. The textbook states that “Saving a job through protectionism typically costs much more than the actual workers salary” (Shapiro et al., Ch. 20.2). In this case the industry that was described by King and Vaughn showed that America bore the financial burden of protecting the automakers industry.
Works Cited
King, Wells, and Dan Vaughn, Jr. The Import Quota that Remade the Auto Industry. American Compass, 29 Sept. 2022, https://americancompass.org/wp-content/uploads/2022/10/AC-Case-Study_Auto-VER_Final-1.pdf. Accessed 25 Feb. 2026.
Shapiro, Daniel, Donald MacDonald, and Scott Greenlaw. Principles of Microeconomics. 3rd ed., OpenStax, 2022.
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