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Trade sanctions are penalties imposed by one country on another to achieve economic, political, or military objectives. They can take the form of tariffs, quotas, or administrative obstacles to trade. They are difficult to implement and rarely achieve their goals, but multilateral sanctions are generally more effective.
Trade sanctions are trade-related penalties levied by one country against one or more other countries. These sanctions fall under the broader category of economic sanctions and can be used to achieve economic policy objectives, political objectives, or military objectives. Trade sanctions usually come in the form of tariffs on imports, quotas limiting the volume of imports, licensing costs or other administrative obstacles to trade.
A country that feels it has been treated unfairly by a trading partner often implements trade sanctions that target economic goals. Actions that may be considered unfair include subsidizing a domestic industry, dumping products below cost on the international market, or installing tariffs or non-tariff barriers to trade. The United States often refers to these types of sanctions as “trade remedies” and has been known to use them to retaliate against unfair trade practices.
An example of the US using trade sanctions against unfair practices occurred in 2002, when President George W. Bush imposed tariffs on imported steel, claiming to protect the US steel industry from illegal dumping of cheap steel by competitors in Europe and Asia. The World Trade Organization (WTO) deemed the US tariffs illegal, prompting several European countries to threaten retaliatory tariffs. This eventually caused the US to withdraw its steel tariffs.
Trade sanctions can also be a political or military tool. Sanctions were used in an attempt to get countries to change their political behavior, focusing on issues such as protection of civil liberties, human rights, threats of aggression and the development of weapons of mass destruction. In these cases, sanctions are usually part of a comprehensive diplomatic and military approach. In other cases, sanctions have been used to cut off funding from countries and organizations believed to be a threat to peace and security or in violation of international law.
Trade sanctions are also an important policy tool for WTO countries. This organization has a binding dispute resolution procedure, enshrined in its bylaws, which allows member countries to come to the WTO as an impartial third party to resolve any trade-related disputes. When the WTO finds favor with a country, it often authorizes it to implement sanctions against the guilty party.
Trade sanctions have been used with some regularity, but they are notoriously difficult to implement and rarely achieve their goals. This is mainly because most goods and services are traded in global markets. If a trading partner places tariffs on a specific import, the destination country can simply export the product to other trading partners. As a result, multilateral trade sanctions, imposed by a bloc of countries, are generally more effective than unilateral sanctions.
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