III.(50%) Macroeconomics:
Short-Essay Questions: All questions may be answered in either English or Chinese. Please note that you are allowed to make necessary assumptions for conducting the analysis.
US President Donald Trump's newly unveiled strategy identified China as U.S. rivals that are "attempting to erode American prosperity," and he accused Beijing of unfair trade practices. Meanwhile, Trump are expected in the near future to announce results on issues like steel and intellectual property theft that could result in tariffs on Chinese goods. "I expect a trade war to emerge in the first part of the year (2018)," said Scott Kennedy.
Assume that the costs and benefits of tariffs are measured on the basis of consumer surplus, producer surplus, and government tariff revenue.