Economics Homework Help

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.

After answering the discussion question, please reply to the discussion question of the classmate ( in the file)