University of Massachusetts United States Antidumping Rules Discussion & Response

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BiraSerr

Economics

University Of Massachusetts Boston

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Video: U.S. Antidumping Rules Kill American Jobs (3:30)

Recently, average tariff rates have decreased significantly as a result of increased WTO membership. We have, however, seen significant increases in the number of anti-dumping and countervailing duty cases filed by nations as they dispute the trade practices of others. The effects of these punitive tariffs are similar to those effects upon the economy when tariffs are used as a form of protectionism, but these punitive tariff rates are much higher and cause price levels of final goods to increase dramatically.

After watching the above video, U.S. Antidumping Rules Kill America, you likely have some thoughts about the the effects of anti-dumping and countervailing duties on productivity and economic growth. It is also an important consideration for US manufacturers as they develop a global marketing strategy.

After unprecedented growth in the United States over the past ten years, Alex and Ani, a U.S. jewelry manufacturer, has begun to expand its global retail sales efforts. Alex and Ani has opened retail stores in Japan, the EU and in several Caribbean islands. Sales have been strong in these countries, and they may be considering further expansion efforts into emerging markets, as well. Most of Alex and Ani’s jewelry is created using recycled metal material, and the costs of production are quite low as a result. The charm bracelets are sold in the U.S. and Europe for $28-$38 each while the cost to manufacture the bracelets is only a small fraction of the retail price. While this is considered a reasonable price in the US and Europe, the market in other emerging markets may not sustain this pricing structure and may lead Alex and Ani to consider lowering the final price of their bracelets. Why should Alex and Ani be concerned about lowering prices to accommodate markets in foreign markets? Consider the difference between sporadic and persistent dumping as well as how thoughtful pricing strategies may be used to avoid some of the negative economic effects.

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Marry: Alex and Ani should be concerned with lowering prices to accommodate foreign markets because it can lead to a short return in the end. The idea of expansion is to grow the business in the most strategic and profitable way. The company may charge and be concerned with lower prices in a foreign country to meet demands of competition (Carbaugh, 172). In comparison to where Alex and Ani is selling comfortably now the market is saturated with brands such as Pandora, Kay, or even recycled shops on Etsy. The opportunity for Alex and Ani selling is a new market, diverse customer base, and gain of competitive advantage to those who have yet ventured into the foreign market. Sporadic dumping is done when a firm disposes of excess inventory in foreign markets by selling abroad at lower prices (Carbaugh,171). Whereas persistent dumping of product happens without a specific end date/time. The pricing strategies when using both needs to consider whether an elastic or less elastic demand in the market will be met. Sporadic dumping tends to be unplanned and can lead to increased tariffs and unforeseen shifts in the demand for the products/supplies. Persistent dumping is more of a convenience for the manufacturers to maximize profits where there is an immediate return. If a thoughtful pricing strategy were used in both situations a business could understand the demand and cost of expansion into foreign industries. As well as a clear understand of marginal cost and demand meeting at a profit maximizing output in the new market (Carbaugh, 173) Robert J. Carbaugh. International economics, 13th Edition. South- Western Cengage Learning, 2010. 38. (n.d.). U.S. Antidumping and Countervailing Duties. International Trade Administration | Trade.gov. https://www.trade.gov/us-antidumping-andcountervailing-duties. Carbaugh, R. J. (n.d.). International Economics (Seventeenth). Chapter 4&5 Sophia: Alex and Ani should be concerned about lowering prices to accommodate markets in foreign markets because of anti-dumping duty which is used by the government to protect producers by imposing a tariff on the foreign goods if they believe that foreign producers export their product at a lower price than they charge for the same product in its own country. In this case, Alex and Anil sell their jewelry in the emerging markets at a lower price than it charges in its own country US. They can be charged against dumping and the government can impose anti-dumping duty on their product which increases their price. Sporadic dumping occurs when there is a temporary surplus of a specific product. Businesses will dump surplus goods in foreign markets without having to reduce prices in their domestic market, which refers to a market within a country’s border. It is done occasionally. Persistent dumping is the permanent type of dumping in which a company sells at a high price in its own country but at a lower price in other countries. Exporting companies benefit from this when demand in a foreign market is more elastic than the demand in the company’s home market. The anti-dumping duty increases the price of imported goods which benefits the domestic suppliers but due to this the domestic producers who can import the raw material at the lower price, now have to pay more which increases the cost of production. Therefore, increasing the price of the product makes the product less competitive, due to anti-dumping less competitive suppliers benefits while the competitive producers and consumers bear the loss which reduces the profit of the company which leads to less investment and less employment, therefore, fail in growth. So, the pricing strategy should be considered which reduces the negative effect of anti-dumping .
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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.Hi, I finished. Please check my work and contact me if you have any doubts. My answer is actually longer than required, but I tried to make a positive economic statement, although things like tariffs and/or subsidies always have some type of normative content or opinion. Bye

Tariffs are always bad. Regardless of which political party or president you might like, reality
cannot be denied. Tariffs favor a few industries or a few people, and hurt thousands of industries
and millions of people. Maybe someone says that 20,000 jobs will be protected by tariffs, or
200,000 jobs. But who pays for that protection? The people that pay for these jobs are 340
million US consumers. Imposing tariffs is the same as subsidizing private companies that are
inefficient. Capitalism should be about efficient allocation of resources. So why should hundreds
of millions of people have to subsidize a much smaller number of workers that simply cannot do
their job efficiently? For example, manufacturers of car parts and components complain about
Chinese or Mexican imports. But why don’t they sell their parts and components at the same
price as Chinese or Mexican companies? Or even American companies that operate overseas and
decide to import their products. Private businesses are not charities, and if Germans have found a
way to produce quality cars...

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