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Chapter 7: Pricing

E-ACTIVITY: TARIFFS, EXCHANGE RATES, AND SHIPPING COSTS (p. 278)

Activity: Investigate Tariffs, Exchange Rates, and Shipping Costs

If marketers decide to sell their product in an international market, they need to consider additional costs: tariffs, exchange rates, and shipping costs. In this activity, you will examine the various components of these additional costs and determine the reasons and effects of each component.

  1. Visit the Canada Customs and Revenue Agency Web site and click on "List of Countries and Applicable Tariffs." Download the most up-to-date PDF file for tariff treatment. Complete the "Countries and Applicable Trade Agreements" chart below. Indicate whether the country is the beneficiary of Most Favoured Nation (MFN), Least Developed Country (LDCT), Commonwealth Caribbean Countries (CCC), or General Preferential Tariff (GPT) tariff treatment. When you have finished, discuss with a partner the reasons why tariffs exist and the reasons for different trade agreements with different countries. Click here to download this organizer.

COUNTRIES AND APPLICABLE TRADE AGREEMENTS

Name of Country
Trade Agreement
Austria  
Hong Kong  
Madagascar  
Jamaica  
Uganda  

  1. The next factor that must be considered is the foreign exchange rate. Use the Bank of Canada's "Currency Converter" to determine the value of the Canadian dollar against the currency of each of the countries on the list. Complete the "Trade and Exchange Rate" chart below, including an explanation of the effect the currency exchange rate would have on goods exported from Canada to that country by a Canadian business. Click here to download this organizer.

TRADE AND EXCHANGE RATE

Name of Country
Exchange Rate
Effect on Exports
and Imports
Japan    
Hong Kong    
United States    
European Union (Euro)    

  1. Another significant cost of doing business in a foreign country is transportation. Visit this site and determine the cost of shipping a 100-kilogram load of goods from Toronto, Ontario, to Dallas-Fort Worth, Texas, via Air Canada airfreight. Is transportation an important consideration in making a decision on marketing goods in foreign countries?