New Balance

Industry: Footwear manufacturing company

Founded: 1906, 113 years ago as the "New Balance Arch Support Company"
Founder: William J. Riley, an Irish immigrant. In 1972 was bought by Jim Davis, an entrepreneur
and marathoner,
Headquarters: Boston, Massachusetts, United States
Number of employees: from only 6 shoemakers in 1972 to now 5,497 worldwide (2019)
Revenue: 4.5 billion USD (2018)
Corporate Milestone:
 1960, designed and manufactured the "Trackster", the world's first running shoe made
with a ripple sole,
 1976, New Balance was voted the best running shoe by Runner's World,
 1978, product line expanded and sales grew rapidly due to Boston Marathon. Boston
area became a center for the running in the U.S.
 1980's, expanded global, set a facility in Flimby, England for the European Market
 2008, inaugurated its state-of-the-art athletic footwear research lab,
 2015, focused on custom shoes and its "Made in America" businesses,

Michael Froman trilemma “which of the two companies was really defending American economic
interests?”

Option A: Choose New Balance (Impose tariff!)

1. Reduce Trade Deficit
Script: The US trade deficit with China alone was US$419 billion in 2018, due to a wide trade imbalance.
Total US exports to China: US$120 billion,
Total US imports to China: US$540 billion
US imports more than it exports, tends US to borrow more from foreign countries such as China and
Vietnam to finance/ supply its deficit.

US is running a deficit on its current account, meaning importing more than its exports, then it is using
more output that it is producing and it is borrowing the difference from foreign countries, which
registers as a surplus - a capital inflow (borrowing) - on the financial account of its BOP (Balance of
Payment) statement.

2. Trade Protection
Script: With tariff, US government tax policy can protect its local manufacturers. Local producers will
have a leverage in terms of price and quality versus products from low-pay countries. Consumers will
benefit more assuming price difference is not high, consumers can choose on quality and have an option
to patronize local products versus imported
Exporting and importing are both important parts of trade relationship between countries. But it is still
better to focus on home grown products and support local business(es).

3. There is No Free Lunch

Script: Imposing revenue tariff is only fair, it increases government funds that can be used to improve
trading processes, protect and help local industries and strengthens them.

4. Promotes Employment and Productivity

Script: more local citizens would have jobs, and more businesses would buy materials from inside their
own countries. With a tax on the imported product, local businesses can sell their products and
generate more revenue. Resulting to increase in productivity and job creation,

5. Reduce Dependency to Foreign Market,

Script: local economy can sustain, withstand by producing products/ services made available locally.
Domestic productivity will also increase, maintaining businesses in the country promotes more jobs,
better life for its countrymen and any surplus in production can be exported.

When a country exports more than it imports, it lends amount of funds abroad which allow foreign
countries to purchase its surplus production.

In 2016 US Presidential election, presidentiables Hillary Clinton, Bernie Sanders and Donald Trump
campaign to fight by bringing US companies back HOME and making products in the USA.