Trade Embargo

Trade Embargo

What is a Trade Embargo?

Definition: A trade embargo involves the government of one country imposing trade restrictions against another. Manufacturers in the nation that announces the blockade are not allowed to export goods to the country against which the sanctions have been declared.

What does Trade Embargo mean?

A trade embargo could ban the export of all goods to a particular country. However, an embargo may also disallow only certain types of material. For example, the export of weapons may be banned while trade in other goods may be permitted.

Why should one country want to limit trade with another? The reason is usually political. If nation A does not agree with the political views or government policies of nation B, a trade embargo may be imposed. This is done by nation A in the hope that the lack of trade will impoverish nation B and force it to come around to nation A’s views.

Consider the economic sanctions and the restriction of trade imposed against South Africa in 1986. Western countries and much of the free world did not agree with the South African government’s policy of apartheid. The U.S., Japan, and many European nations imposed a trade embargo to force the South African government to give equal rights to blacks. The blockade was successful, and South Africa gave up its policy of apartheid in 1990.

Example of a Trade Embargo

The U.S. imposed trade sanctions against Cuba in 1962. Although the embargo has subsequently been lifted to a certain extent, most of the restrictions remain in place. The reason for the U.S. government’s action is that it is against Communism and the one-party system that Cuba follows.

The embargo has not changed Cuba’s politics. But the trade sanctions have had a substantial effect on the country’s economy. According to the United Nations’ regional economic body for Latin America, Cuba has suffered an economic loss of $130 billion over the last 56 years due to the U.S. action.

Summary

An embargo attempts to change a country’s political policies by enforcing economic sanctions. At times this works, but in other instances, it does not have the desired effect.