In general, companies go international because they want to grow or expand operations. The benefits of entering international markets include generating more revenue, competing for new sales, investment opportunities, diversifying, reducing costs and recruiting new talent.

Globalization allows companies to find lower-cost ways to produce their products. It also increases global competition, which drives prices down and creates a larger variety of choices for consumers. Lowered costs help people in both developing and already-developed countries live better on less money.

The impact of globalization on international business is causing the trade and investment barriers to decline. Globalization has caused all countries to come together and reduce trade and investment barriers across countries. This has proved to be beneficial to all countries because they can easily trade and invest.

The Challenges of Globalization

• Exploitation. American companies have been known to use cheap foreign sweatshop labor to make cheap American goods.
• High Investment Costs.
• Confusing Local Systems.
• Weak Regulation.
• Immigration Challenges.
• Localized Job Loss.

With the prospect of increased tariffs looming, World Finance lists the countries that impose the highest charges on imported goods.

• 1 – The Bahamas (18.56%)
• 2 – Gabon (16.93%)
• 3 – Chad (16.36%)
• 4 – Bermuda (15.39%)
• 5 – Central African Republic (14.51%)

Trade restrictions are typically undertaken in an effort to protect companies and workers in the home economy from competition by foreign firms. A protectionist policy is one in which a country restricts the importation of goods and services produced in foreign countries.

Many countries restrict imports in order to shield domestic markets from foreign competition. The most common type of trade barrier is the protective tariff, a tax on imported goods. Countries use tariffs to raise revenue and to protect domestic industries from competition from cheaper foreign goods.

Prohibited Imports (2) The Government may ban imports, temporary imports or transit of goods if circulation of such goods is banned under the legislation of the country of export, of origin, or of destination of such goods.

Tariffs hurt consumers because it increases the price of imported goods. Because an importer has to pay a tax in the form of tariffs on the goods they are importing, they pass this increased cost onto consumers in the form of higher prices.

Tariffs affecting U.S. agricultural exports, 2018–19. All other things being equal, when foreign countries impose tariffs on exports of U.S. goods, the increased costs of these goods usually result in lower demand in the importing country, creating a supply surplus in the exporting country.

Top 10 International Trade Pros & Cons – Summary List