You are an employee of an U.S. firm that produces personal computers in Thailand and then exports them to the U.S. and other countries for sale. The personal computers were originally produced in Thailand to take advantage of relatively low labor costs and a skilled workforce. The U.S. government decides to impose punitive 100% ad valorem tariffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict U.S. exports to Thailand. How do you think your firm should respond

Question

liah2051 liah2051

16-07-2021
Business

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You are an employee of an U.S. firm that produces personal computers in Thailand and then exports them to the U.S. and other countries for sale. The personal computers were originally produced in Thailand to take advantage of relatively low labor costs and a skilled workforce. The U.S. government decides to impose punitive 100% ad valorem tariffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict U.S. exports to Thailand. How do you think your firm should respond

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anthougo anthougo · Answer 1 · 2021-07-19T08:32:10+02:00

Answer:

Circumventing Punitive Tariffs on Imports

The firm should respond with some of these approaches:

1. Consider all low-cost countries with skilled workforce to relocate production facilities.

2. Export the computers to Canada from Thailand.

3. Reduce the price of the computers to make them attractive to the U.S. market.

4. Lobby the governments of Thailand to remove trade barriers with U.S.

5. Lobby the U.S. government to reconsider or reduce the ad valorem impunitive tariffs.

Explanation:

Firms have always circumvented trade barriers by using any of the above legal approaches, favoring it. It is always beneficial to consider production destinations with low labor costs and the availability of skilled workforce when locating certain production centers. The U.S. firm can take advantage of the economic climate of Hong Kong and Malaysia vis-a-vis Thailand for its production center. The best decision should be driven by economic indexes and not political sentiments.