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Trump Plans To Impose Tariff From 10% To 25%, What Will Happen To Singapore Market?

Trump Plans To Impose Tariff From 10% To 25%, What Will Happen To Singapore Market?

Why 25% instead of 10%? That’s twice of the initial tariff level!

On July 10 2018, Trump seeked to impose 10% on thousands of Chinese imports. While the tariffs would not be imposed until after a period of public comment, the proposed level was then raised to 25% by Trump – this could escalate the trade dispute between the world’s two biggest economies.

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Economically speaking, we know that by raising its tariff to a higher level simply serves as a motivation to motivate domestic producers to increase production of their output. This results in higher consumer prices, higher producer revenues and profits, and higher government revenues which make tariffs a way to make transaction from consumers to government treasuries effectively.

However, having tariffs begets strong consequences: 1) Cost of production for American companies increases 2) China will retaliate in response.

There are some opinions on the real motive behind imposing tariffs on China – it is more than just attempting to save its own country.

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Trade Tariffs Hit Asian and US Stock Markets Badly

Trade Tariffs Hit Asian and US Stock Markets Badly

But first, what are trade tariffs?

A tariff is basically a tax paid on imports and exports of goods and services.

An imposing tax on an imported product would cause its price to increase, which results in a decrease in demand for imported goods. In relation, the price of local products becomes lower to the consumer.

The US Total Imports vs Dutiable Imports from 1821 to 2016 can be seen below:

The current US deficit as of 2017 is $500 billion. The US imports from China about four times as much as it sells to that country in goods as services, leaving Washington more room than Beijing to tax a greater share of bilateral trade. The U.S. trade deficit with China was $375 billion in 2017. The trade deficit exists because U.S. exports to China were only $130 billion while imports from China were $506 billion. The United States imports consumer electronics, clothing, and machinery from China. A lot of the imports are from U.S. manufacturers that send raw materials to China for low-cost assembly. Once shipped back to the United States, they are considered imports.

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Citic Envirotech(CEE) – Green and Win

Citic Envirotech(CEE) – Green and Win


This column is jointly written by @gordon_ong and @devinnath as part of the #analystsondemand series.

-Gordon has a demonstrable interest in equity investments, financial markets, and negotiating deals. As @NTUInvestmentClub president, he has an understanding of what factors drive an organisation’s success.
-Devin is a trader and investor who balances FA and TA in his investment decisions. He believes in using news and FA to spot the right stocks and rely on TA to give him the lowest risk-to-reward ratio possible.

Brief Background

CITIC Envirotech Ltd (“CEL”, “Group”) is a leading membrane-based integrated environmental solutions provider which specialises in water and wastewater treatment, water supply and recycling. It also provides solutions in sludge and hazardous waste treatment as well as river restoration. CEL undertakes both turnkey and investment projects as well as provides plant operation and maintenance services in water and environmental projects.

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