Example Of Essay On Thailand Tariffs
Retaliatory tariffs by the United States on Thailand will lead to the repositioning of portfolio investments in Thailand. Many investors in Thailand will sell their bonds and stocks so that they can exit the Thailand market. It is worth to note that tariffs on the United States by Thailand will not have a large effect because the United States is a large country that has the ability to diversify its source of personal computers. However, the tariffs that on Thailand will have a great effect on the computer market in Thailand because Thailand is a small country whose producersare more reliant on the larger consumer base in the United States. Considering this dynamic in mind, the first option that my company would take is to exit that Thailand market. There are other nations such as Malaysia and Hong Kong that would offer the same business environment that my company is looking for. My company is interested in reducing production cost by making sure that labor wages are at the minimum. Transferring my company to Malaysia or Hong Kong would offer the same result. However, it is important to note that my company can also take advantage of the domestic consumption of personal computers in Thailand. This would mean that because the government of Thailand has placed tariffs on US exports, the number of computer imports from the United States has reduced. This would mean that the pricing of computers domestically would increase. Therefore remaining in the Thailand computer company would see my company make more profit in the domestic market with regards to computers.
However, with the 100% ad valorem tariffs by United States on Thailand, the fact remains that there would be inflation in Thailand. Inflation would means that the value of the Thai Baht in relation to other major currencies in the world would go down. With high levels of inflation, it would be more difficult to maximize profit in Thailand. This would mean that the only option that would remain viable in this case would be relocating my computer to Malaysia or Hong Kong. It is worth noting that though relocating may appear as being a viable option in paper it comes with some challenges. This is because government policy regarding different products is not necessarily to same across countries. This would mean that my company is likely to face either more stricter regulations in Malaysia and Hong Kong. Alternatively, my company might face more competition from other domestic companies producing computers in Malaysia and Hong Kong. Though we may assume that the level of competition in a perfect market is the same across geographic areas, the fact remains that different business environments offer different levels of competition. It is also important to note that there are additional costs that are associated with relocation. This would include the setting up of new infrastructure in Malaysia and Hong Kong so as to begin operations in the countries.
Because the original intent of the company was to supply personal computers to the United States and Europe, it would not be worthwhile to focus of domestic production because doing so would expose the company to a new consumer base whose preferences and tastes regarding personal computers is not well established by my company. Considering all the above factors in mind relocating to Malaysia and Hong Kong that still trade with the United States would allow my company to access the initial consumer base in the United States and Europe.