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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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