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21-12 International Trade [CH 21

Key to Procter & Gamble's
success in selling more than
160 brands in 140 countries is
the firm's ability to adapt
marketing and technology to
different cultures. Households
in Europe have front-loading
washing machines that are
not suitable for dispensing
liquid laundry detergents. So
P&G developed a "dosing
ball," a plastic sphere that
consumers fill with detergent
and place among the clothes
in the machine. The washer's
agitation releases the
detergent into the wash water.
The dispensing innovation
has helped P&G capture more
Photo source: Courtesy of The Proctor & Gamble Company than half of Europe's liquid
laundry detergent market.

Physical Barriers
A variety of physical barriers can influence international trade. The United States,

Myanmar and Liberia are the only other countries in the world that haven't officially
adopted the metric system. In these countries, metric measurements are used alongside
Imperial/English measurements. When dealing with the other nations of the world for

sales, U.S. firms will use metric-measured components.
Another example of a physical barrier to trade is that American electrical products
are engineered for 110 volts of electric current and much of the rest of the world is
engineered for 220 volts of current. When Americans take personal hair dryers and
electric shavers abroad, they need voltage adapters to use them.

American-made cars often face physical barriers because they are made for roads
that are wide by foreign standards. Many streets in Europe and Asia, for instance, were
built before the United States was even colonized, so automakers there have always

built small cars.

Tariffs and Trade Restrictions
International business is also affected by tariffs and related trade restrictions such
as import quotas, embargoes, and exchange control. While these factors have played a
pronounced role in world business, there has been a general worldwide movement

toward free trade. A recent example of this is the United States-Canada-Mexico trade
Agreement (USMCA), negotiated and adopted under the President Trump (R)
administration, which replace the North American Free Trade Agreement (Clinton
(D)). USMCA made numerous changes that removed barriers for American firms

creating a more level trading plane for Agriculture, manufactured goods, and labor.
Tariffs. A tariff is a tax levied on products imported from abroad. Some are a set
tariff amount per pound, gallon, or other unit; others are figured on the value of the good.
Tax levied against imported This tax, tariff, can be classified as either revenue or protective though it is levied by
products.
government and retained by government. A revenue tariff is designed to raise funds
specifically for the government. Revenue tariffs were a major Constitutional source of
U.S. government revenue, until the early twentieth century. A protective tariff, which
is usually higher than a revenue tariff, is designed to raise the retail price of imported

products and advantage domestically made goods. It has often been argued that a
country should protect its "infant industries" by using tariffs to bar foreign-made

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