You are an employee of an U.S. firm that produces personal computers in Thailand

Question

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. Other possible locations considered at that time were Malaysia and Hong Kong. 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? What does this tell you about the use of targeted trade barriers?

Answer the question using course material one-page, times new roman size 12, single spaced

Explanation / Answer

If the manufacturing requirements remains same,the company can still look for production in Malaysia or Hong Kong.The ad valorem tariff introduced by the US government will require new strategies to be devised by manufacturers to get around these limitations.

The manufacturers can look for other locations to manufacture the product.The firm can also produce the personal computer in sections and then assemble them in US.Another strategy would be to continue the manufacturing in Thailand and assemble them in Hong Kong or Malaysia.It is very easy to bypass these types of targeted tariff barriers and so,they are usually ineffective.

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