Final answer:
Antidumping taxes intended to protect U.S. interests in the domestic flat-panel display industry resulted in major companies relocating production overseas, reflecting the unintended negative consequences of protectionism.
Step-by-step explanation:
When discussing the impact of economic policies such as antidumping taxes on laptop manufacturing costs in the United States versus Taiwan, one must consider how these taxes affect production decisions. Before the International Trade Commission (ITC) imposed a dumping margin tax to protect domestic industries, flat panel displays—a crucial component making up about half the cost of producing laptops—were more affordable.
After the tax, the cost of manufacturing laptops in the U.S. increased significantly, prompting major companies like Apple, Toshiba, and IBM to relocate production overseas or cancel plans for U.S. facilities. This action indicates the downside of protectionist policies, as it can inadvertently push manufacturing abroad and lead to job losses, contrary to the intended protective effect for U.S. interests.
Similarly, when comparing production costs between countries, such as in South Korea and Taiwan where mobile phone production costs vary, the minimum price for trade must reflect the production costs that will enable both countries to trade profitably. If Taiwan's cost is $10 per phone and South Korea's is $5, the international trade price must be above $10 for both countries to engage in trade. Otherwise, Taiwan would be selling at a loss.