1. 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. 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 business needs to determine whether moving to a different country will be more advantageous
in the short and long term to respond. Moving to Malaysia, for instance, might help you save money, but
starting a new factory might be too expensive. Due to NAFTA, the proximity of Mexican labor, and the
low wages of Mexican workers, moving the business to Mexico would be the most advantageous option
if the company's primary customer is an American. Trade barriers have primarily harmed businesses,
and high 100 percent ad valorem tariffs are a form of coercion between governments. To assist
American workers, there is also increased pressure to relocate operations back to the United States;
Nonetheless, this has an effect on customers and the free market system as a whole. Due to the rising
cost of Thailand's imported goods, even if they are of lower quality, consumers will have to look
elsewhere for gadgets. Similar trade restrictions can be found in Chinese solar panels that have been
dumped in the US and EU. According to these two trade giants, domestic or regional solar power
companies should be able to compete with China's aggressive, government-backed solar power
industry.

2. During a pandemic, whose interests should be a paramount concern of government trade

policy: the interests of producers (businesses and their employees) or those of consumers?
Explain

The primary focus of governments should be on the long-term interests of customers.

Unfortunately, customers who are only influenced by a few dollars are less motivated and effective
advocates than a few firms that have a lot riding on their decision.