Measures the government can use to control trade

Trade (tariff) barriers.

• These are measures taken by government to reduce imports and in some cases ban trade completely with some countries.

Customs (import) duty

• A tax levied on imported dutiable goods.
• Makes imports more expensive when compared to locally made goods.

Quota

• A limitation on the quantity of goods to be imported.
• Reduces the quantity o imports.

Embargo.

• A complete forbidding trade with other countries either for political or health reasons.
• Reduces imports to zero.

Foreign exchange control.

• The government, through the Reserve Bank of Zimbabwe, may ration or refuse to offer foreign currency to importers.
• Restricts importer from buying goods.

Import licences

• The government may refuse to issue new licences or renew expired import licences.
• Reduces the number of importers and consequently imports.

Subsidies

• The government may subsidise ( give money to) exporters.
• Exporting becomes cheaper and importing remains expensive.

Devaluation of local currency.

• The local Zimbabwean currency will be worth less in foreign currency terms.
• Imports thus become more expensive and exports much cheaper.
• For example if an item costs US $500 to import and the exchange rate is US$1=Z$2
• The item will cost Z$1000 to import.
• If the Zimbabwean currency is devalued to US$1 = Z$ 4
• The item will cost Z$2000.
• On the other hand if an item costs Z$1000 to export at the former exchange rate of US$1: Z$ 2 It will cost US$500 on the international market.
• When the currency is devalued to US$ 1: Z$4 the time will cost US$250 on the international market.

To access more topics go to the Commerce Notes page.