Out of the options provided, the options that best describe why countries establish limits on trade are:
- To restrict foreign influence in a sector
- To restrict the importations of foreign goods
- To punish other countries
Further Explanation
When countries establish a limit on trade by restricting foreign influence in a sector, such restrictions are also known as protectionism.
Protectionism refer to Economic policies in which a particular country restricts the imports of other countries using some method. Some of these methods include
- Import quotas
- Placing a tariff on imported goods and services
To restriction importation of foreign goods: countries that restrict the importation of foreign goods are doing so to protect workers and companies in their economy against competitions by a foreign company.
For example, the united states limit the quantity of sugar that is imported into the United States.
The United States introduced this policy to cut down the supply of sugar. This policy also increases the prices of sugar.
To punish other countries: this is also called sanctions. It is a penalty that is imposed on another country. Countries can establish limits on trade as a sanction and such sanctions can be in any form such as:
- Tariff
- Embargoes
- Non-Tariff barriers
- Asset seizures or freeze
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KEYWORDS:
- tariff
- sanction
- foreign influence
- domestic
- industries
- good
- services
