Trade Barriers Affect Economy By Shane Tully

Trade barriers are set in place for a reason, to stifle economic trade, and to help out their own economy. Back in March, 17 countries of the 20 countries in global trade, violated their trade agreements to not use protectionist policies. Protectionist policies are basically the restraining of trading between two countries because of prices or other factors. Originally, all the countries vowed to not let this happen, but it did, and it could affect the global economy drastically.
Trade wars are not unusual, but highly not liked because it freezes the trade in those countries and decreases their real GDP. According to the Washington Post, many countries, including the U.S., have started to take measures to find ways to make a bigger profit, even if it is violating the NAFTA and WTO rules. An example of this would be, China and India because of the recent tax subsidies that were raised for domestic exporters. This means that these subsidies will help those domestic exporters lower their prices, because of the supply of their money they just received, and initiating a competitive advantage to the exporters, because they can now sell for less and still make a big profit.
This of course relates to the classroom work we have been doing because we weigh the cost and benefits of trade with trade barriers, tariffs and quotas. Basically, if we were to use a price and quantity graph, of demand and supply, for my example in the last paragraph, the total supply with a subsidy curve would be shifted to the right from the equilibrium supply, thus having quantity of the product increase and the price decrease. This in simple terms means that they can now sell more of a certain product for a lower price because of a government subsidy.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html