A trade war is an economic conflict in which nations impose and increase tariffs and other non-tariff barriers against each other. Typically, it is rooted in extreme economic protectionism and involves so-called tit-for-tat measures that are designed to hurt the opposing party’s economy more than its own.
As trade wars escalate, they disrupt global supply chains and raise costs for consumers. They also slow economic growth and may strain international relations. This is particularly true for developing countries, which are often disproportionately affected by higher import prices and reduced demand for their exports.
In the US, the effects of the trade war are largely being felt by consumers and businesses that rely on imported goods. For example, the retaliatory tariffs imposed by China are raising prices for American manufacturers that produce their products using components sourced from multiple countries. As a result, those companies are experiencing squeezed profit margins, which can lead to layoffs and reduced investment in the future.
Meanwhile, the Trump administration has announced country-specific tariffs on dozens of countries and an across-the-board 10 percent duty on all other nations. The president has threatened to impose the tariffs on all other countries except China unless they agree to a trade deal. The EU has offered a zero-for-zero tariff deal, but the president says it is not enough to avoid a trade war with the EU.