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Domestic goods, which are sold abroad, are referred to as exports. Foreign goods, which are purchased by domestic consumers, are known as imports. Free trade refers to trade, which is allowed to flow freely between nations. The pattern of trade can be altered through the use of barriers of trade. Barriers to trade are factors that prevent imports and exports from being exchanged freely. Barriers to trade are often referred to as protectionism. This is because governments, to protect domestic firms from competition from imports, often use barriers to trade. The most common form of protectionism is a tariff, which is a tax imposed on goods which are imported into a country. Tariffs increase the price of imported goods and are designed to reduce the demand for imports. Governments can also use quotas, which place physical limits on the amount of goods that can be imported. Quotas are also designed to reduce demand for imports by increasing their price. If governments subsidise exports, this is also a form of protectionism

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