A trade war happens when two countries get into an economic conflict. This usually occurs when one country responds to what it sees as unfair trade practices from another by imposing restrictions like tariffs on imports.
Domestic trade unions or industry lobbyists might influence politicians to make imported products less appealing to consumers, which can lead to a shift in international policy that sparks a trade war.
Additionally, trade wars often stem from a lack of understanding about the broad advantages of free trade.
Learn more about Trade War
Trade wars are often seen as a consequence of protectionism, which involves government measures that limit international trade.
Countries typically adopt protectionist strategies to protect local businesses and jobs from outside competition. It’s also a way to address trade deficits.
A trade deficit happens when a country imports more than it exports. Tariffs are taxes or duties placed on goods brought into a country.
The list of Trade Wars
Trade wars aren’t a new concept; they’ve been around for ages, dating back to when countries first started trading with each other. A good example is the conflicts among colonial powers in the 17th century, where they battled for the exclusive right to trade with their overseas colonies.
- British-China
- U.S.-Europe
- U.S.-China and Others
Conclusion
A trade war happens when one government slaps heavy tariffs on another country, usually as a reaction to that country’s own tariffs or protective trade measures.
These trade wars often hurt both sides since the increased costs of trade usually fall on consumers. Still, some supporters argue that trade wars can be beneficial for safeguarding domestic industries.