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Which of the following is NOT an issue that domestic manufacturers operating in the United States must​ address?

a) Compliance with federal regulations
b) Labor costs and availability
c) Environmental impact and sustainability
d) Currency exchange rates

User Jclouse
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Final answer:

Domestic manufacturers in the United States must not address currency exchange rates, as this is relevant to international trading rather than domestic operations. Regulations, labor, and environmental sustainability are their primary concerns, with environmental regulation costs typically representing a small percentage of total costs.

Step-by-step explanation:

The issue that domestic manufacturers operating in the United States must NOT address is d) Currency exchange rates. This factor is primarily a concern for businesses involved in international trading where the value of transactions can be affected by the fluctuating values of different currencies. The supply and demand of a currency, domestic interest rates, the stock market, and the gold standard are more relevant in the context of international trade and finance but not directly related to domestic manufacturing concerns such as compliance with federal regulations, labor costs and availability, and environmental impact and sustainability.

Domestic manufacturers are significantly impacted by compliance requirements, such as the array of taxes and tariffs, quotas, subsidies, and regulations aimed at promoting environmental protection. These regulations may increase production costs and affect competitiveness in the global market, especially if similar standards are not enforced internationally. However, concerns about a 'race to the bottom' scenario, where factories relocate to countries with weaker environmental rules, do not fully hold up since factors like labor costs, supplier proximity, transportation, and local government quality often outweigh the cost savings associated with low environmental standards.

Conclusively, although environmental impact and sustainability are essential considerations for domestic manufacturers, the proportion of trade with high-income countries with similar or stricter environmental standards diminishes the incentive to relocate based on environmental regulation alone. The myriad of location factors beyond environmental cost underscores the complexity of siting decisions for manufacturers.

User Clare Macrae
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