II. (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.

In March, 2018, the United States formally announced its approval of the 25% tariff on steel and 10 percent on aluminum. Mexico and Canada were granted initial exemptions. In April, 2018, China imposed tariffs of up to 25% on 128 American products. The United States further responded by announcing a $50 billion in tariffs on some 1,300 products, including medical devices, aircraft parts and batteries. China then returned with a threat of tariffs on the products of soybeans, cars and chemicals; and added another $50 billion in tariffs on American products. The U.S. position is that the tariffs are penalties for China stealing American technology and trade secrets.