Instruments of trade protection:

Before addressing  the question of why countries use protectionist measures, let us learn what are the tools or instruments of  trade protection? The tools of trade protection that countries typically use to restrict imports can be broadly classified into price related measures such as  tariffs and non-price measures or non-tariff barriers (NTBs).

A tariff  is a tax levied on imports. Tariffs may be applied to imports of both final and intermediate goods. This aspect is taken into account while assessing the extent of protection extended to domestic  industry by the tariff. We will learn about a concept called the 'effective rate of protection', which is used to measure the extent of actual protection granted to value added in a particular industry by the entire tariff structure (covering final and intermediate goods). Non-tariff barriers (NTBs)  are applied to quantities and other attributes of  traded goods and services.