Trade War

See: Trade Surplus.

In a galaxy not that far away...

It was the war of the century. Little Michael was hurt by Little Lindsay making fun of his new haircut, so he hid her hair ties. In retaliation, Lindsay hid Michael’s action figures...which caused Michael to hide her dolls...and on and on it went, until their rooms were practically switched. Well, that didn’t turn out as planned.

This is what a trade war is like, except with trade barriers...usually tariffs. Quotas and other trade restrictions are tools of the trade war too, though. A trade war is a protectionist policy for two countries, in which each of them retaliates against the other with vengeful and hurtful tariffs.

The thing about trade wars is that they might feel good...but they’re not good for either economy. When country A slaps a tariff on country B and says “We’re protecting homegrown jobs!”...well, chances are good that country A’s economy will suffer, too.

If you were to take Econ 101, you'd learn the basic math of why trade barriers are bad for both nations. There were at least four Anglo-Dutch wars. Guess what three of them were about? Yep...trade wars. The Opium Wars between China and England also started because of a trade war. What was to become Hong Kong was a super sweet port for the Brits; they wanted to funnel all of their goods to the Chinese via that port, and likewise, take Chinese goods back to England from there. So trade barriers from the Chinese on the Brits made them...mad. So mad that they ended up taking Hong Kong (they agreed to give it back to China a century later).

In recent years, the U.S. and China have been in a trade war. As China has transitioned from a largely agrarian society to one with a substantial middle class, its economic growth and impressive technology have the U.S. scrambling to remain top dog globally.