Many hear the term 'tariffs' and think it is bad, but they do not understand how it works. Simply put, tariffs are taxes added to imported goods.
Let's assume that China sold a phone to the United States for 7,000 Chinese Yuan, which is approximately 1,000 US dollars. If Trump imposes a 30% tariff, the price will rise to 1,300 US dollars. This extra 300 dollars does not go to China, but to the US government.
This high price may scare buyers, which harms the sales of the manufacturing company and its stock price. To maintain its competitiveness, the company may lower the export price to 800 US dollars, and thus, with the tariffs imposed, it will still sell for around 1,040 US dollars in the United States. But this also reduces its profits, negatively impacting its performance and stock value.
Regardless of how exporters handle the situation, they lose their profit margin. Since many Asian countries heavily rely on US markets, these tariffs put significant pressure on their companies' profits.
In short: tariffs may seem like a political move, but they actually raise prices, reduce profits, and cause shock in the global economy.
