The stakeholders of the case
In the case under consideration reveals the problem of the foreign trade, where there is confrontation between the domestic and foreign manufactures. In that regard, the parties concerned here are the furniture makers from the United States and the Chinese intermediaries. It should be also mentioned that the International Trade Commission is also concerned with this dispute in economic and financial terms.
It is obvious that the low prices for the Chinese furniture create a rigid competition and deprive the domestic companies from the large segment at the American market. The producers realize the negative impact of the imported good on the trade situation in the United States. Furthermore, the introduction of low prices also influence on the decreasing demand on their products and thus on the profitability of their products. Regarding this, the domestic furniture makers refer to the price decrease as to dumping activity so that, eventually, their concern is legally approved. It is important to mention that the introduction of the low-priced furniture could also impose some injuries on the domestic industry development and therefore, it may damage the economic and financial situation in the country.
Considering the Chinese makers’ situation, their low price policy is the only to survive on the international market. This is especially problematic for small companies to penetrate to the foreign commerce and to remain their high competitiveness of the company. The export management intermediaries are the most successful method to access the globe market. Judging upon the case, the Chinese low prices are approved by the low-priced workers and the high-tech equipment thus showing the manufactures’ attempt to maximize the success of the imported goods. In addition, as the wooden production captures a significant niche of international trade, the high-quality of the goods and the low cost-efficiency are the only way-out in this situation.
The consequences of the tariff imposing on the Chinese furniture
Being a small company, Chinese furniture makers will be able to survive if they were imposed by the higher tariffs by ITC. Hence, the Chinese import is doomed to be a failure, as initially their penetration was carried out independently without help of the intermediary companies. Therefore, the new tariffs could hamper the development of the foreign import and lead to the bankruptcy of the import business as well. On the other hand, the introduction of tariffs contributes to the stabilization of the price policy and the establishment of the equal conditions for all the manufactures in that sphere. For the Chinese manufacturers, this reform could serve as the trigger point in changing the business strategies in conducting the foreign trade. Moreover, the involvement of the intermediaries could even increase the profitability of the imported companies; it will also provide the inexperienced companies with the useful information of conducting business (Scarborough & Zimmerer 2006 p. 399).
Such alteration could also improve the economic and financial situation of the furniture makers in the United States. Hence, the high tariffs will lessen the foreign intervention and will grant a wider range of opportunities for domestic trade prosperity and a more profitable position among other producers. However, such an approach could also decrease the competitiveness and increase cost-efficiency of the product. These changes could influence the price setting and affect the supply and demand of the product.
Reference List
Scarborough, N. M. & Zimmerer, T. W. (2006). Effective Small Management: An Entrepreneurial Approach. US: Pearson Education. P 399.