What is a 'Nontariff Barrier'?

A nontariff barrier is a way to restrict trade using trade barriers in a form other than a tariff. Nontariff barriers include quotas, embargoes, sanctions, levies and other restrictions and are frequently used by large and developed countries. Nontariff barriers are another way for an economy to control the amount of trade that it conducts with another economy either for selfish or altruistic purposes.

BREAKING DOWN 'Nontariff Barrier'

Nontariff barriers are commonly used by countries in international trade, and they are typically based on the availability of goods and services and political alliances with trading countries. Overall, any barrier to international trade will influence the economy because it limits the functions of standard market trading. The lost revenues resulting from the barrier to trade are called an economic loss.

Countries can set various types of alternative barriers in place of standard tariffs. Such barriers often release countries from paying added tax on imported goods and create other barriers that have a meaningful yet different monetary impact.

An example of nontariff barriers is the recent round of United Nations sanctions against North Korea and the Kim Jong Un regime adopted in December 2017. The sanctions cut exports of gasoline, diesel and other refined oil products to the nation and prohibit the export of industrial equipment, machinery, transport vehicles and industrial metals to North Korea. The barriers are designed to put economic pressure on the nation to stop its nuclear arms and military exercises.


Countries may use licenses to limit imported goods to specific businesses. If a business is granted a trade license, it is permitted to import goods that would otherwise be restricted for trade in the country.


Countries typically use quotas for the importing and exporting of goods and services. In nontariff barrier procedures, countries agree on specified limits for goods and services that are permitted for importation to a country, typically without restrictions, up to a specified limit. Quotas can also be set for specific time frames. Additionally, quotas are also often used in international trade licensing agreements.


Embargoes restrict the trade of specified goods and services. Embargoes are a measure used by governments for specific political or economic circumstances.


Countries impose sanctions on other countries to limit their trade activity. Sanctions can include increased administrative actions and additional customs and trade procedures that slow or limit a country’s ability to trade.

Voluntary Export Restraints

Voluntary export restraints are a type of nontariff barrier used by exporting countries. Voluntary export restraints set limits on the amount of goods and services to be exported to specified countries. These restraints are typically based on availability and political alliances.

Standard Tariffs

Nontariff barriers can be used in place of or in conjunction with standard tariff barriers, which are taxes that importing countries pay to exporting countries for goods or services. Tariffs are the most common type of trade barrier, and they increase the cost of goods and services in an importing country to the benefit of the exporting country.

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