Question

Below are two current events:

#1-Recently President Trump announced new tariffs on imports of steel and aluminum. The tariffs are a 25 percent on imported steel and a 10 percent on imported aluminum.

#2 - From The Associated Press, April 2, 2018:

Some goods on which the Chinese government raised tariffs Monday.

25 PERCENT TARIFFS

Most goods targeted for 25 percent tariffs are varieties of pork, for which China is the No. 3 American export market.

— PORK

Fresh and chilled bone-in pork forelegs and hind legs, chilled whole and half hog heads, pork liver, chopped pork, other fresh and chilled pork

— ALUMINUM

Scrap aluminum

15 PERCENT TARIFFS

Chinese regulators also imposed 15 percent duties on apples, almonds and dozens of types of fruit

— FRUIT

Apples, fresh or dried; coconut, fresh and dried; bananas, fresh or dried; pineapple; pomegranates; mangos; grapefruit; grapes; watermelon; cherries; strawberries; dried apricots

— NUTS

Brazil nuts, cashews, almond kernels, walnuts, macadamia nuts, pine nuts

— WINE

Sparkling wine

— HERBS

Ginseng

— PIPES

Stainless steel and alloy pipe used for petroleum or natural gas, multiple diameters

Questions:

a. In which of the six components of the general environment would you categorize these events?

b. In your own words, discuss why a fertilizer company should be concerned.

c. Why should a clothing retailer want to be pay close attention to the international news and on going events related to these actions?

Answer 1

a. In which of the six components of the general environment would you categorize these events?

• Event 1: It is political, as due the change in government the tariffs have changed.
• Event 2: It is Economical, as the changes are due to trade conditions fixed by China. And these impact the economies of scale in US and the condition of trade.

b. In your own words, discuss why a fertilizer company should be concerned.

A fertilizer company should be concerned because the key ingredients for fertilizers are from

• Alumimium and petroleum, due to the tariffss the cost of manufacturing goes up directly
• And the steel used in equipments is also expensive, which means the expenses will go up for maintenance.
• So, as the cost of production will go up the profits will shirnk.

c. Why should a clothing retailer want to be pay close attention to the international news and on going events related to these actions?

A cloth retailer want to pay close attention because

• Petroleum cost will go up leading to increase in manufactuting of all kinds of dyes and colors
• This will increase the cost off finished goods in textile
• And all the equipments are made of steel, which is now more expensive, so the cost of production will go up.
• Chances are the margins for retailers will decrease,