Nontariff barriers (NTBs) reduce imports by limiting quantities, increasing costs, or creating uncertainties. Government officials in a country have many reasons for imposing NTBs, but economic efficiency apparently is not a valid reason for this choice. The basic analysis of the main nontariff barrier to trade, an import quota, indicates that it is at least as bad as a tariff. It is more costly than the tariff if it creates domestic monopoly power or if resources are used up in the private pursuit of licenses to import items legally.

A form of protection that became important in the 1980s, especially in the United States and the EU, is the voluntary export restraint (VER) arrangement. Here the importing country threatens foreign exporters with stiff barriers if they do not agree to restrict exports by themselves. Under a negotiated VER arrangement, the main foreign exporters form a cartel among themselves, agreeing to cut export quantities. At the same time, they are allowed to charge the full markup on their limited sales to the importing country, where the product has become more expensive. A curious result is that the importing country, which insisted on the VER in the first place, loses even more than if it had collected a tariff or quota markup itself.

Other important nontariff barriers include domestic content requirements, mixing requirements, government procurement favoring domestic products, and a host of quality and safety standards that have protectionist effects.

The net costs of import barriers, both tariff and nontariff, look small from some perspectives but large from others. They look small as a share of GDP when calculated in terms of the ordinary deadweight loss triangles. Yet this analysis overlooks foreign retaliation, enforcement costs, rent-seeking, and other considerations that can make import barriers more expensive. In relation to the protection provided to incomes in protected sectors, the net costs of import barriers are often rather large.

In 1995, the World Trade Organization (WTO) was born as the forum for global rules toward international trade. Member countries of the WTO, and the General Agreement on Tariffs and Trade (GATT) before it, conduct multilateral trade negotiations to lower trade barriers. Quotas on industrial products have largely been eliminated, and tariffs have been gradually reduced to low levels through the negotiated agreements, but the use of other NTBs has been rising. The Tokyo Round and the Uruguay Round included some efforts to reduce the use of NTBs. The new Doha Round will continue the global negotiations to liberalize tariff and nontariff barriers.

Under Section 301 of the U.S. trade law, the U.S. government can unilaterally use the threat of imposing new import barriers, in an effort to force foreign-country governments to remove allegedly unfair policies that limit the access of U.S. exports to these countries. With the advent of the much-improved dispute settlement procedure in the WTO, the U.S. has reduced its use of Section 301.