• Many hear the term 'customs duties' and think it is bad, but they do not understand how it works. Simply put, customs duties are: .. a tax added to imported goods ..
- Let’s assume that China sold a phone to the United States for 7000 Chinese yuan, which is approximately 1000 US dollars. If Trump imposes a 30% customs duty, the price will rise to 1300 US dollars. This additional 300 dollars does not go to China but to the US government ..
This high price may scare buyers, negatively impacting 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, thus, with the imposition of duties, it continues to sell at around 1040 US dollars in the United States. However, this also reduces its profits, negatively affecting its performance and stock value ..
Regardless of how exporters deal with it, they lose their profit margin, and since many Asian countries rely heavily on American markets, these customs duties put significant pressure on their companies' profits ..
• In short: .. Customs duties may seem like a political step, but in reality, they raise prices, reduce profits, and create a shock in the global economy … |