A trade war is an economic conflict involving increased tariffs and other non-tariff barriers between nations. They are often a result of extreme economic protectionism and can lead to escalation of tensions between countries, including the possibility of military action.
History shows that trade wars are common and can be damaging for all parties involved. They can also derail long-term strategies for economic growth and prosperity.
While some trade battles are a result of domestic politics, others involve economic concerns and global interests. For example, the opium wars between China and the British Empire in the 19th century were a result of competing claims over Chinese markets for Indian-produced opium. These economic disputes can escalate and threaten global supply chains, and they may require a significant investment of resources to resolve.
The Trump administration has launched several high-level negotiations with the goal of resolving trade disputes with Beijing, but the two sides have yet to agree on a resolution. In the meantime, the U.S. government has stepped up its efforts, imposing tariffs on Chinese goods and threatening other penalties.
Tariffs are only one tool at a nation’s disposal to protect its economy and advance its political goals, and they can have devastating effects on global supply chains. Other types of trade barriers include quotas that limit imports, subsidies that support domestic producers, and regulations that block foreign competition. Some of these barriers, like export restrictions, can be more subtle than tariffs but can still devastate economies and increase tensions between nations.