Implication of Import Tariffs on United States in the Global Market

Given the impact of technology and automation on a) an individual’s ability to monetize their human capital; and b) the idea that humans need to contribute to society to feel happy; please respond to the following questions: a) What are your personal philosophies about firms using automation without regard to its impact on society? b) What type of a political and economic system do you think might be best suited for a society where automation can provide the bulk of people’s needs? Keep in mind that robots do not consume (assuming they are not sentient in the way humans are) and that demand for products comes from people with the ability to pay. see Ref #1 see Ref #2 see Ref #4 see Ref #3 5 c) What would you recommend for today’s business leaders to be ready for such a time? You can ignore doomsday scenarios such as Skynet from the Terminator.

Implication of Import Tariffs on United States in the Global Market

Import tariff or import tax refers to the levies imposed on the imported goods and services. In the economy, the tariffs are utilized to limit and offer restrictions to trade since they raise the price of the imported services and goods. Therefore, most of the imported goods that have import tariffs imposed on them are often expensive for the consumers to purchase. In the United States, the import tariffs or the import tax refers to the taxes and the fees that are charged by the United States Customs when the importers bring the goods into the country. In most instances, it is a proportion of the overall cost of the services or products, and contains both the freight and insurance charges. Therefore, it increases the total cost of the products. The major implication of the imports is that they are an advantage to the local producers within the market. The primary source of the advantage emanates from the cost of their products in the market. In most instances, the prices of the goods produced by the local producers do not carry additional levies, making them cheap. Tariffs are often used as a barrier to international trade. They are utilized to protect the domestic market from the manipulation of the multinational companies and the infiltrations from the goods produced by institutions in other countries.

There are various other reasons why countries impose tariffs on the imported goods. One of the reasons is that it assists in raising revenues. Revenues that the countries collect from the imposed tariffs are significant and hence, may assist a country in a carrying out other forms of investments. Import tariffs may also be placed on the goods that have significant environmental implications. When such goods have tariffs placed on them, it makes them expensive and discourages consumers from purchasing them. The revenues collected from the tariffs will also assist in putting in place corrective measures. Finally, putting in place import tariffs assist in protecting the local domestic firms from unfair competition (US International Trade Commission, 2011). They assist with enhancing the competitiveness of the local firms, as well as offering them a competitive advantage in relation to the pricing of the goods.

There are various steps that United States trade representative, Michael Froman should take concerning the import tariffs on Vietnamese footwear to create a favourable environment by levelling the playing ground. This will enhance the Americans competitiveness in the global market. One of the steps would be re-evaluating the American trade agreements with other countries.  For many years, the republican and the democratic administrators in the United States have worked to promote open markets for the American exports and create open and fair rules through Washington’s administration. In the current economy, there is the debate regarding the American role and contribution in the world. In the Trumps administration, there is a raging debate as to whether America should escalate its trade engagements with the global community or retreat from it. Most of the people are debating on the grounds of whether there is the need to reconstruct the rules of the road or resort to the protectionism and isolationism (Van Asselt & Brewer, 2010). Moreover, Michael Froman argues out loud that there is the need to re-evaluate on the best mechanisms that should be put in place to ensure that the products produced by the American institutions can effectively compete and win in the global economy. It is hard to underestimate the relevance of these questions to the United States economy and its strategic interest across the globe.

There is a need to evaluate the position of the United States in challenging other countries in the global arena. One of the critical issues that Michael Froman should address is the emergence of the Chinese economy and its threats to the American position in the world markets (Van Asselt & Brewer, 2010). According to Froman, China is not an enemy, but rather a competitor. In the current global market debate, there are perceptions that China may not be adhering to the same rules that other participants in the global economy are following. Therefore, it may be taking advantage of the United States, and hence, may be impacting the ability of the country to effectively compete in the market. Michael Froman needs to ensure that United States does not allow China to prescribe the rules that should get followed in trade (Li & Whalley, 2012). By doing so, it would allow China to develop rules that are more likely to favor it and hence, lead to the decline of the America influence in the world. The United States should be setting the rules of trade, including the tariff rules. By doing so, it is more likely that the country would be able to provide a fair and level market. If Michael Froman enables the United States to deny China the opportunity to dictate the rules in the market, it will give the American producers the ability to compete and win in the global market. The first step is to re-evaluate the Trans-Pacific Partnership trade agreement (US International Trade Commission, 2011). Thorough restructuring of the Trans- Pacific Trade Agreements, would assist in countering the influence of China in interfering with the ability of United States to fairly compete and win in the global economy.

Michael Froman should also establish clear guidelines regarding the import tariffs levied on the United States products by various countries and economic blocks in the world. There are different approaches that the United States may utilize in advocating for a fair or indeed preferential treatment of the country’s goods in the global economy. One of the steps that United States Trade Representative should take is to establish bonds with various countries. The bonds should be forged by commerce. Vietnam was once a United States adversary. However, after the establishment of the diplomatic ties in 1995, trade between the two countries has significantly progressed (Van Asselt & Brewer, 2010). Therefore, there is a need to ensure that Michael Froman establishes new and beneficial ties with countries that were previously not in good diplomatic terms with the United States.  Bilateral trade agreements would assist in either reducing or eliminating the import tariffs levied on Vietnamese footwear, hence levelling the playground for effective competition. A critical example is a progress witnessed in the development of the trade relations between the United States and Vietnam. The trade association between the two countries; United States and Vietnam has significantly enhanced the American’s level of competition in the world economy.

The other steps that Michael Froman may take on import tariffs would be putting in place measures that would assist in ensuring that countries have reduced the levies imposed on goods originating from the United States. According to Dunning (2013), one of the ways would be promoting democratic values. By being good examples in promoting democratic values in the countries, assisting such economies in crisis and by generally providing support in critical areas of the economy, it will assist in ensuring that the United States has significant influence in the economy of the country. The country will be able to have influence on some of the specific facets of the economy, such as duties imposed on the imported goods. Additionally, United States products are also more likely to get preferential treatment in such countries. Michael Froman influence would likely lead to the reduction in the tax impose on the goods originating from the United States. Additionally, it is imperative to mention that by promoting democratic values, the country would be able to transform adversaries into friends and then partners and finally, the partners into allies.

 In most instances, United States adversaries often impose huge import tariffs to the United States products. Through this, the products are often expensive in such markets. Therefore, they may not be able to effectively compete with the local industries. Some of the approaches that Froman should advocate for are the increased participation of the United States in advancing human rights and being involved in joint efforts that assist in stabilizing those countries in crisis. According to Van Asselt and Brewer (2010), by undertaking such efforts, the United States would be able to comprehensively influence the tariffs imposed on its products. Therefore, there is the likelihood that such tariffs may be eliminated and better terms negotiated for the country’s products. In so doing, America would be able to effectively compete with other competitors, and the likelihood of winning would be high. The United States needs to promote the strategic importance of the Trans-Pacific Partnership. It is through the agreement that the country can increase its influence in the region. Countries in such regions are in a position to benefit from the American’s role in promoting peace and democratic ideals that promote the advancement of trade.

 The United States government needs to play a leadership role in advancing better economic ideals that promote the American position in the world. It is through that TPP that America would be able to knock down the trade barriers that plague the American products in the global markets. Additionally, trade barriers such as the high import tariffs towards American Products would likely reduce, owing to the established trade links. America would be able to have a new bargaining ground that would enhance its capability in the market. The TPP has diverse benefits to the American market since through it, the country would be able to advance its economic and strategic interest in the world (US International Trade Commission, 2011). Therefore, the likelihood of the country competing and winning the global market would be significantly high.

Finally, Michael Froman should ensure that he brings all stakeholders involved in the protracted debate into a negotiation table. Import tariffs on footwear have been a bone of contention for so many years now, a dispute between the Vietnamese footwear have complained over the increased import tariffs. However, the debate rages since some of the United States produces point out that some of the tariffs should remain in place. The dispute has also brought together other footwear companies that manufacture their products abroad. The argument is that the United States should utilize the proposed Trans- Pacific Partnership trade agreement to remove import tariffs levied on footwear (US International Trade Commission, 2011). If Froman takes a leading role in ensuring that he brings all the concerned parties to a negotiating table, it is more likely that these companies would be able to maintain their operations in the United States. Therefore, the United States would remain the leading place in the world in footwear innovation and design.

 There is the need to warrant that mechanisms are put in place to ensure that there is a reduction of import duties. Excessively high import tariffs only help to reduce the number of jobs in the country. It reduces the ability of the economy to grow.  According to Waugh (2010), a stagnating economy will reduce the American influence in the world. America would not be able to compete with other superpowers such as China, Japan, Russia and other strong economies in the world (Li & Whalley, 2012). Therefore, establishing a conversation that would help in reducing the import tariffs levied on the product in the United States would assist in improving the United States economy.

There are some recommendations that I would suggest for the today’s business leaders. By ignoring the doomsday scenarios such as Skynet and Terminator, there is a need for the business leaders to have strategic goals that would improve the business. The strategic goals would also help the business to have clear visions and the goals that need to be achieved over a specific period. Additionally, business leaders should also ensure that they form alliances with other business so that they can improve their bargaining power. They will be able to negotiate better terms for their products in the market. Finally, business leaders should keep themselves abreast of what is happening in the market. Through this, they would be able to make necessary adjustments when circumstances call for such actions.

References

Amiti, M., & Davis, D. R. (2012). Trade, firms, and wages: Theory and evidence. The Review of economic studies, 79(1), 1-36.

Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge.

Li, C., & Whalley, J. (2012). China and the TPP: A numerical simulation assessment of the effects involved (No. w18090). National Bureau of Economic Research.

US International Trade Commission. (2011). The Economic Effects of Significant US Import Restraints. U. S. International Trade Commission.

Van Asselt, H., & Brewer, T. (2010). Addressing competitiveness and leakage concerns in climate policy: An analysis of border adjustment measures in the US and the EU. Energy Policy, 38(1), 42-51.

Waugh, M. (2010). International trade and income differences. The American Economic Review, 100(5), 2093-2124.

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