Which of the following scenarios is an example of a trade sanction?

• A. Country A provides subsidies to domestic steel producers to encourage local production.
• B. Country A imposes a tax on domestic steel producers to reduce pollution.
• C. Country A restricts imports of steel from Country B in response to environmental violations.
• D. Country A negotiates an international agreement to reduce carbon emissions.

Answer: (C)

Verified step by step guidance

1. Understand the definition of a trade sanction: it is a penalty or restriction imposed by one country on another to influence behavior, often involving trade barriers like tariffs, quotas, or import restrictions.
2. Analyze each scenario to see if it involves a penalty or restriction on trade between countries:
3. Scenario 1: Subsidies to domestic producers are a form of support, not a sanction, because they encourage local production rather than restrict trade.
4. Scenario 2: A tax on domestic producers to reduce pollution is a domestic policy, not a trade sanction, since it does not target foreign trade.
5. Scenario 3: Restricting imports of steel from another country in response to environmental violations is a direct trade restriction aimed at influencing another country's behavior, which fits the definition of a trade sanction.