On Friday, July 6, 2018, at exactly 12:01 am, the United States fired the first shots in a war. No missiles were used. Nor were drones or U.S. Marines involved. Instead, these shots were billions of dollars worth of tariffs aimed at the Chinese economy. This was a trade war. One that continues, could expand in 2025, and could becꦆome the largest in worl𝔉d history.

In this article, we take a look at what trade wars can mea♔n for the disputing countries,🌜 businesses, and consumers.

The Basics of Trade Wars

The term “trade war” is used to describe an economic conflict where, in response to 澳洲幸运5官方开奖结果体彩网:protectionism, countries impose trade barriers such as tariffs, restrictions, and quotas against each other.

Basically, one country imposes targeted tariffs on another’s economy in order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading𒉰 practices of the latter are unfair.

Example of a Trade War

Let’s say Country A and Country B both manufacture rubber chickens. County B then starts to subsidize its rubber chicken manufacturin♊g. That🌺 means that the government of Country B is paying part of the cost of manufacturing, thus reducing the price for consumers.

Now, Country A is upset, because no one is 🐬going to buy rubber chickens from it if they’re cheaper to buy from Country B. So, Country A has two options. It can negotiate with Country B or impose tariffs on imported rubber chickens. The tariffs would raise the cost of Co🌼untry B’s rubber chickens, punishing Country B.

If Country B wants to continue exporting to Country A, it has to pay a higher tax on its exported rubber chickens. Then Country B would most likely hit back with its own tariffs. This 澳洲幸运5官方开奖结ও果体彩网:tariff back-and-forth is considered a trade war.

Countries get into conflicts over trade frequently. To sort them out, they can approach the 澳洲幸运5官方开奖结果体彩网:World Trade Organization (WTO) for arbitration and a decision over which is at fault. They can negotiate 🃏a deal directly with each other. However, another option—that chosen by the then-Trump administration in 2018—is to impose unilateral tariffs on its opponent’s goods in the hope that they will buckle.

How Did the Trade War Play Out?

America’s Action

On Friday, July 6, 2018, the Trump administration imposed sweeping tariffs on $34 billion worth of Chinese goods. The tariffs targeted a wide variety of manufactured tech products, from flat-screen televisions, aircraft parts, and medical devices to nuclear reactor parts and self-propelled machinery.

While it was believed that most Americans would feel no effects of these tariffs—parents wouldn’t be shopping for aircraft parts—the Chinese economy would certainly suffer. The U.S. tariffs specifically targeted high-tech Chinese goods to hurt the Made in China 2025 initiative, which sought to transform China into an advanced manufacturing powerhouse.

President Donald Trump pushed further, warning that the U.S. could ultimately target over $500 billion worth of Chinese goods. In 2021, the U.S. imported $506.4 billion worth of goods from China.

China’s Response

In response to these new tariffs, China imposed its own. It targeted American agricultural products like pork (which added an estimated $57 billion, directly and indirectly, to the U.S. gross domestic product (GDP) in 2021), soybeans, and sorghum.

Caught in the crosshairs were American farmers and big industrial-agriculture operations in the Midwest. These are constituencies that largely voted for Trump in each of his runs for the Presidency. China sought to affect these politically powerful groups of Americans directly and dramatically, ꦜperhaps hoping they’d pressure President Trump to lower the barriers.

The War Today

Despite being critical of Trump, former President Joe Biden maintained the tariffs on China. In September 2024, the Biden administration went so far as to increase the tariffs on several Chinese imports, including electric vehicles, solar cells, and electric vehicle batteries.

In November 2024, Trump promised another round of tariffs on China, as well as tariffs on Canada and Mexico, when he returned to the presidential office in January 2025. Effective Feb. 1, 2025, President Trump imposed an additional 10% tariff on goods imported from China. Chinese officials have expressed a desire for a "win-win solution" regarding trade tensions, as the country hopes to expand its exports to the U.S., which have fallen significantly since 2018.

Why China? 

Intellectual Property Theft

So, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic e🃏spionage. The larg⭕est set of tariffs from the Trump administration came out of a federal investigation into Chinese intellectual property misdeeds.

The Trump administration designed the tariffs to punish China for trading access to the Chinese market for foreign tech plans. While those concerns were valid, they existed under Presidents George W. Bush and Barack Obama. Both presidents refrained from imposing tariffs of the magnitude seen under the Trump and Biden administrations.

The Trade Deficit

The second reason concerned the U.S. 澳洲幸运5官方开奖结果体彩网:trade deficit with China. According to data released by the Commerce Department, the gap between American goods exported to China and Chinese goods imported to the U.S. rose to $355.3 billion in 2021 from $310.8 billion in 2020.

Donald Trump has long promised to eliminate the trade gap. Both his first and second administrations blamed the imbalance on the decline of American manufacturing and a reliance on foreign goods. The Trump admi🔯nistration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices.

What’s the Impact on American Consumers?

Effect of Tariffs

The effect of ꦯtariffs can be felt beyond the borders of the targeted country.

It’s important to understand that U.S.-China trade doeꦺs not take place in a vacuum. Trade is part of a global economy. Different countries can be invo🎀lved in the making and selling of goods before they reach their final destinations.

When the U.S. put tariffs on China, the world’s largest manufacturing hub, it likely affected other countries, products, and companies that are p꧋art of the global supply chain.

In our global, interconnected economy, it is nearly 💮impossible to target one country (or one industry) without affecting others, including allies.

Potential Threat to Consumers

These tariffs had the potential to hurt American companies and consumers even more than the firms in China targeted by the Trump administration. A study by the Federal Reserve Bank of San Francisco in 2011 showed that for every dollar spent on an item labeled Made in China, 55 cents went to services produced in the United States. This is yet another ⛦example ꩵof how raising tariffs and starting trade wars in a global economy might come back to hurt U.S. businesses and consumers.

American consumers may have felt the consequences of Trump’s trade war with China. When companies have to make up for higher costs due to new tariffs, they shift that burden onto consumers. It takes time for 🍰these higher business costs to filter down to stor🐼es. It is likely that some prices have gone up and more will do the same.

The Bottom Line

Trade wars are economic battles between countries that seek redress for wrongful economic actions that pose a ཧthreat to a country’s economic well-being. Tariffs can be part of those battles🌌.

However, in imposing tariffs, governments should bear in mind that 澳洲幸运5🍃官方开奖结果体彩网:more than the ꦚtarget country may suffer. Economies operate on a global scale. Economic policies designed to punish one country can have a trickle-down effect on other nations and their consumers. In fact, the tariffs imposed on China by the U.S. since 2018 are believed to have damaged U.S. businesses and consumers without accomplishing the hoped-for goal of reducing the trade deficit.