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The USA Government created the 1962 Embargo against Cuba in response to the expropriation, by the Cuban Government, of American lands and companies in Cuba. The excuse the USA Government used back then to impose the Embargo was to force democracy into Cuba. The efforts of taking Democracy to Cuba were completely frustrated; the Embargo only villianized the American Government on the Cuban citizens eyes, and yet, the American Government keeps the Embargo, despite the lack of support from almost every nation in the world.
The Embargo works both ways. No only USA has restrictions against Cuba, but Cuba also has restrictions against USA and American Citizens. The following list displays the most important ones.
Books, Art, Movies and Cultural Material

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Both countries authorize the transit of any of these products. The Embargo doesn't restrict the circulation of cultural material.
Medicine

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The embargo forces no restrictions against the transit of medicine.
Food

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Not restrictions at all, neither from Americans, neither from Cubans.
The three product categories above, circulated in 2007 more than 600 million dollars between the two countries.
Gifts

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The Cuban Government created restrictions against Americans giving gifts to Cubans. An American can only gift Cubans to the limit of 200 dollars a month and not every kind of gift is authorized. Americans are only allowed to gift Cubans with food, clothes, hospital products and fishing material.
Relatives In Cuba
The Cuban Government allows American to visit their relatives in Cuba for only 14 days every three years. The visitor can't spend in Cuba more than 50 dollars a day.
American Money

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300 dollars each three months is the limit that Cuban Government imposed to someone sending dollars to Cuba. Oh… that is only if the person sending the money doesn't have relatives in the Cuban Government, because in that case, the limit is Zero.
American Professionals

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Cuba doesn't allow American professionals on the Island, except for journalists, Government members in official trips and researchers.
Ships

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The American Embargo prohibits any ship that tracks in Cuba to check-in at USA for at least 6 months, even if it was only a quick stop for refueling.
Cuban Immigrants
The American Embargo prohibits USA from accepting any Cuban immigrant. USA returns to Cuba any Cuban found on American soil.
Cuban Products

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USA specifies in the Embargo that none Cuban product or raw material may enter USA. American can't take Cuban products to USA even if they buy it in some other country. The Embargo rules turn the famous Cuban Cigars into completely illegal products.
American Tourists

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Tourists from America are not allowed in Cuba. Neither the Cubans accept them nor the USA Government allows Americans to visit Cuba. Of course, USA can't stop an American from flying from any other country to Cuba, and those Americans are punished.
Well… that's it. The Embargo rules loosened a bit in the last years, but certainly it is not friendly politics. Some have hope that after Fidel the renouncement in the last February, the next American President may think about a drastic reduction of the Embargo restrictions.