This blog is part of our ‘Beginner’s Guide’ series; insightful, accessible explainers of all things trade. The author of this instalment is Pinar Gunes, an Assistant Professor in Trade and CITP researcher at the University of Sussex. 

In this piece, Pinar analyses how trade barriers shape the global landscape, and explains why understanding their role in international trade is key right now. If you wish to deepen your knowledge on trade policy, check out the CITP’s Online Diploma in International Trade Policy.

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In recent years, trade barriers have moved from niche economic discussions to the centre of political debate and daily headlines. While tariffs have become the most visible and contentious symbols of this shift, they are only one part of a much larger and more complex story. Today, trade barriers encompass everything from digital data restrictions and service-sector regulations to quotas, licensing rules, and environmental standards. This resurgence marks a significant shift away from the decades-long trend toward trade liberalisation and signals not just a change in economic strategy, but a deeper evolution in how countries interact in today’s world. Understanding this broader landscape is therefore essential. It matters not only for those seeking to understand the future of global trade, but also for individuals, both as consumers and workers. Trade barriers influence the prices we pay, the jobs available to us, and the stability of the industries — and even the countries — we rely on.

What are trade barriers, really?

In simple terms, barriers to trade are anything that makes it more difficult or expensive for goods and services to move between countries. Some barriers arise naturally, for example because countries are far apart geographically, while others are the result of government policies and regulations.

Trade barriers affect market access for firms, reduce competitive pressure, and shape prices and choices for consumers. While they can protect domestic industries, they often come with trade-offs, including higher prices, reduced variety, and lower efficiency.

Natural barriers: distance and geography

One of the oldest and most persistent barriers to trade is distance. Transporting goods over long distances raises costs, increases delivery times, and creates logistical challenges. Therefore, countries that are geographically closer tend to trade more with each other. Neighbouring countries also often share cultural, historical, or institutional similarities that make trade easier.

Geography also matters especially for countries that are landlocked. Without direct access to ports, these countries must rely on neighbouring states’ infrastructure and border procedures to reach international markets. This increases transit costs, raises the risk of delays, and can make exporting less competitive.

These natural barriers help explain why regional trade is often stronger than trade between distant partners.

Policy barriers: when governments intervene

Apart from natural barriers, many trade barriers result from deliberate government choices. The most popular example is a tariff, which is a tax placed on imported goods. Tariffs make foreign products more expensive than domestic ones, which can protect local producers and generate government revenue. However, they also raise prices for consumers and firms purchasing intermediate inputs. A recent real-world example is the Trump-era tariffs imposed by the United States on a wide range of imports, particularly from China.

Beyond tariffs, governments use a wide range of policy barriers to shape trade. Some are direct limits, such as quotas, which cap the quantity of a good that can be imported and tend to push prices up by restricting supply. Others work more quietly through administration. Import licensing, customs procedures, and paperwork requirements can delay shipments and raise costs even when no additional tax is applied. Regulations can also function as barriers. Product rules on testing, labelling, safety, or certification, often grouped as technical barriers to trade, may be justified on consumer-protection grounds. Yet they can still put foreign firms at a disadvantage if compliance is costly or tailored to domestic producers. In agriculture and food, sanitary and phytosanitary measures play a similar role: they can genuinely protect health, yet they can also be applied in ways that effectively keep foreign competitors out.

Governments can also tilt the playing field through industrial policy. Subsidies, whether in the form of direct payments, tax breaks, or cheap credit, lower domestic production costs and make it harder for imports to compete. Some countries can use trade remedies such as anti-dumping and countervailing duties: additional charges imposed when imports are judged to be unfairly cheap or supported by foreign subsidies. Others may require firms to produce locally through local content rules or strict rules of origin, forcing foreign companies to relocate parts of the supply chain if they want market access.

Finally, trade is often shaped by geopolitics through sanctions, export controls, and procurement rules that prioritise domestic suppliers, especially in strategic industries.

Why do governments step in?

Although tariffs or regulatory measures are meant to protect domestic industries, they also raise prices for consumers and increase costs for firms. Economic analysis suggests that even if a government aims to protect a particular industry, tariffs are rarely the most efficient way of doing so. Retaliation from trading partners can compound the damage and amplify uncertainty. Why, then, do governments keep imposing barriers to trade?

Part of the answer lies in politics and interest groups as much as economics. Even if, overall, a country gains from trade, the losses are usually more visible. They tend to be concentrated in specific industries and regions, which makes them politically more powerful. As a result, politicians often turn to tariffs and other measures to win support from affected communities. Trade policy has become an easy way for leaders to show they are “doing something,” signalling protection for communities that feel left behind.

Beyond domestic politics, tariffs also operate as instruments of statecraft. They can send a message of displeasure, create bargaining chips, and shift the balance of a wider negotiation. Sometimes, this is less about trade itself and more about influence.

Governments also justify protective tariffs on “infant industry” grounds. These are new sectors that might be strategically important (think advanced manufacturing, green tech, or semiconductors) but are not yet able to compete with established foreign producers. Tariffs can give domestic firms a temporary cushion to scale up production, attract investment, improve quality, and move down the cost curve through learning-by-doing. Over time, this support can help these firms stand on their own.

China’s early development of its auto industry is often cited in this context. For years, China maintained very high tariffs on imported finished cars (commonly cited in the 80–100% range), which made large-scale importing unattractive and encouraged foreign manufacturers to produce inside China, often via joint ventures, to access the domestic market. Over time, and in line with WTO commitments, tariffs were reduced: to 25% by mid-2006. By this point, domestic capacity and capability had expanded substantially.

However, such a strategy has pitfalls. First, it may encourage firms and industries to seek protection under the guise of an infant industry. Second, “temporary” protection can become politically entrenched. Once industries and workers organise around the benefits, rolling tariffs back is difficult, even if the original rationale has faded. The result can be complacency, weaker incentives to innovate, and consumers footing the bill longer than promised. Third, in many cases, there are more efficient policy tools that could be used.

Finally, for some countries, particularly those with limited administrative capacity, tariffs are a practical way of generating government revenue. Collecting income or corporate taxes requires strong institutions: reliable records, a broad tax base, effective enforcement, and the ability to reduce evasion. Tariffs, by contrast, are relatively easy to administer because trade passes through a small number of ports and border checkpoints. Instead of tracking millions of transactions across an economy, the state can collect taxes at a few choke points from a smaller number of importers.

This may be especially important where a large share of economic activity is informal or cash-based, making domestic taxation harder. In those settings, border taxes can provide predictable funding for basic public services. Although even for the US, tariff revenue has been one of the goals of the tariffs introduced by Trump in 2025.  The downside is that tariffs can be regressive—raising the price of everyday imported goods—and they can distort consumption and production choices. Even so, when the alternative is weak tax collection or chronic budget shortfalls, tariffs can look like one of the most straightforward tools available.

Today, trade barriers are more than economic tools 

They are also signals of geopolitical tension, shifting national priorities, and a world renegotiating what “open trade” really means. Their return to the headlines reminds us that globalisation isn’t a fixed system; rather, it’s a set of rules that can be rewritten, tightened, or weaponised.

For voters, consumers, and anyone trying to see past the slogans, understanding trade barriers is crucial. It turns trade disputes from noisy politics into a clearer story about power, protection, and who bears the cost. Behind our purchases and their prices, there’s almost always a policy choice at play.

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Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.

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