Trade wars escalate tensions and can disrupt economies, resulting in recessions, supply chain disruptions, and political instability. They can also destabilize global stability and undermine international initiatives to reduce barriers between nations. In addition, they often benefit specific domestic interests at the expense of other citizens and businesses. Politicians and economic elites, for example, may promote a trade policy that benefits their industries, regardless of the aggregate cost.
As the United States and China struggle to balance their bilateral goods deficits, escalating tariffs have triggered a vicious cycle of countermeasures. While the two nations have some mutually beneficial trade in services, their enormous gaps in goods and technology have led to a high-stakes conflict that threatens global prosperity.
In early 2018, President Trump imposed steel and aluminum tariffs on a broad range of Chinese imports. China responded with a reciprocal set of duties on U.S. products, including pork, wine, and steel piping. Although modest in scale, these tariffs were strategically designed to hit politically sensitive sectors—including agriculture in pro-Trump states. They also served as a clear warning that further escalation would be met with equal force.
The Trump administration’s deep unpopularity abroad has given world leaders the incentive to stand up to its coercive threats. In Europe, British Prime Minister Keir Starmer and French President Emmanuel Macron have seen their popularity rise as they use Trump as a foil.