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?

The way that my firm would respond to this would be to lobby the Thailand government administration. The reason why I would have to do this would be for them to end the barriers that restrict the exports from America.

After this is successful, I would have to lobby the US to have them end the tariff then I would move my operations to Malaysia and Hong Kong.

What this goes to show is the fact that trade barriers are very effective at damaging the economy of any target nation.

It also shows that targeted trade barriers are an effective way of discouraging barriers to trade in the first instance and can be used to eliminate trade barriers also.

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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-Such targeted trade barriers can often be easily circumvented without having to locate production facilities in an expensive country like the U.S.

Explanation:

Hence such targeted trade barriers can often be easily circumvented without having to locate production facilities in an expensive country like the U.S.

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