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

Question

You are an employee of a U.S. firm that produces personal computers in Thailand and then exports them to the United States 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 the time were Malaysia and Hong Kong. The U.S. government decides to impose punitive 100 percent 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 should your firm respond? What does this tell you about the use of targeted trade barriers?

Explanation / Answer

Let us come to the first question- the company should use lobbying. Lobbying the Government of Thailand to remove barriers related to administration, lobbying American government to remove the tariff and moving the operation of the company operation in Malaysia and Hong Kong. The company should have flexibility in production. The company should have forward-looking approach and research which nation is best for manufacturing its product and services.

Second question- this oval overall scenario tells us that if there is targeted trade barrier, it will be very effective damaging the economy of the target nation pr market. This also presents that these type of targeted trade barrier could be utilized to melt down trade barriers.

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