DEFINITION of 'Embargo'

A government order that restricts commerce or exchange with a specified country. An embargo is usually created as a result of unfavorable political or economic circumstances between nations. The restriction looks to isolate the country and create difficulties for its governing body, forcing it to act on the underlying issue.


An embargo will restrict all trade with a country, or aim to reduce the exchange of specific goods. For example, a strategic embargo prevents the exchange of any military goods with a country. A trade embargo will restrict anyone from exporting to the target nation. Because many nations rely on global trade, an embargo is a powerful tool for influencing a nation. (For more see, How Embargoes Affect International Business.)

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