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 US 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 1

ANSWER:How a firm will respond which originally belongs to US, which is imposing ad valorum tariff on Thailand in response to its administrative trade barriers which negatively impacting US export:

Tech companies can do little in preventing trade wars(as it can be seen in case of trade war between US and China),what it can do most is:

1.Looking for alternative destination where they can take advantage of cheap but skilled labour according to question Hongkong,Malaysia etc.

2.Tech firm can show its concerns by discussing it with various stakeholders involved in it because various factors are involved and linked with it like such tariffs will make goods (Computers) costlier for US consumers also,it will do harm for US companies as well hence reduce their profits that they used to bring in their native country hence will hamper employability capacity of firm in US also.

Part 2: What does this tell us about use of targeted trade barriers,it tells us various impacts:

1.Such practices if used in average and restricting unfair trade practices of other country can help domestic industry.

2.If used in excess will lead to vicious cycle of measures where tit for tat will start and will finally convert in to trade war.

3.then it'll create disturbance in to global supply chains because world is more interconnected today.

4.It will not be beneficial for both the countries,their businesses,employees,consumers as well as investors also.

Hence we can say that to counter such trade practices which are unfair like dumping,non trade barriers by other country such measures can be helpful if practiced in average quantity.