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1. Shard Calculation

Query:

Response:

Calculated Shard: 148 (from laksa107)

2. Crawled Status Check

Query:

curl -X POST \
  'http://laksa148.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/insights/how-would-trade-war-affect-you/\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.investopedia.com/insights/how-would-trade-war-affect-you/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/","crawl_time":1775690430,"first_indexed_time":1531862614,"http_code":200,"src_unparsed":"com,investopedia!www,\/insights\/how-would-trade-war-affect-you\/ s443","src_root_hash":"7273739457760125548","history_drop_reason":null,"meta_title":"How a Trade War Could Impact Your Economy","meta_descriptions":["Discover how trade wars affect market efficiency, national interests, and your economy amid rising protectionism trends."],"attrs_boilerpipe_text":"Key Takeaways\nA trade war involves countries imposing economic restrictions like tariffs and embargoes.\nTrade wars are meant to protect national interests, but can hurt local economies.\nThe U.S.-China trade war began in 2018 over disputed tariffs.\nTariffs can be a response when diplomatic trade efforts fail.\nThe U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance.\nOn 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 become the largest in world history.\nIn this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers.\nUnderstanding the Fundamentals of Trade Wars\nThe term “\ntrade war\n” is used to describe an economic conflict where, in response to\nprotectionism\n, countries impose trade barriers such as\ntariffs\n, restrictions, and\nquotas\nagainst each other.\nBasically, one country imposes targeted tariffs on another’s\neconomy\nin order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading practices of the latter are unfair.\nExample of a Trade War\nLet’s say Country A and Country B both manufacture rubber chickens. County B then starts to subsidize its rubber chicken manufacturing. That means that the government of Country B is paying part of the cost of manufacturing, thus reducing the price for consumers.\nNow, 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 Country B’s rubber chickens, punishing Country B.\nIf 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\ntariff back-and-forth is considered a trade war\n.\nCountries get into conflicts over trade frequently. To sort them out, they can approach the\nWorld Trade Organization (WTO)\nfor 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.\nFast Fact\nThe U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement.\nThe Course and Outcome of the Trade War\nAmerica’s Action\nOn 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.\nWhile 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.\nPresident 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.\nChina’s Response\nIn 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.\ngross domestic product (GDP)\nin 2021), soybeans, and sorghum.\nCaught 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, perhaps hoping they’d pressure President Trump to lower the barriers.\nThe War Today\nDespite 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.\nIn 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.\nEffective 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.\nWhy China Plays a Major Role\nIntellectual Property Theft\nSo, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest set of tariffs from the Trump administration came out of a federal investigation into Chinese intellectual property misdeeds.\nThe Trump administration designed the tariffs to punish China for trading access to the Chinese market for foreign tech plans.\nWhile 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.\nThe Trade Deficit\nThe second reason concerned the U.S.\ntrade deficit\nwith 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.\nDonald 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices.\nImpact of the Trade War on American Consumers\nEffect of Tariffs\nThe effect of tariffs can be felt beyond the borders of the targeted country.\nIt’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved in the making and selling of goods before they reach their final destinations.\nWhen the U.S. put tariffs on China, the world’s largest manufacturing hub, it likely affected other countries, products, and companies that are part of the global supply chain.\nIn our global, interconnected economy, it is nearly impossible to target one country (or one industry) without affecting others, including allies.\nPotential Threat to Consumers\nThese 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.\nThis is yet another example of how raising tariffs and starting trade wars in a global economy might come back to hurt U.S. businesses and consumers.\nAmerican 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 stores. It is likely that some prices have gone up and more will do the same.\nWhat Is a Trade War?\nA trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes.\nWhat Is a Trade Deficit?\nA trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus.\nWhy Are Tariffs Necessary?\nThere are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step.\nThe Bottom Line\nTrade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018.\nHowever, in imposing tariffs, governments should bear in mind that\nmore than the target country may suffer\n. Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs.\nIn 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.","attrs_markdown":"\n\n[Skip to content](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#main)\n\n[Investopedia](https:\/\/www.investopedia.com\/)\n\n[Trade](https:\/\/www.investopedia.com\/simulator\/?inv_to_sim=global_nav)\n\n- Please fill out this field.\n- [Newsletters](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/)\n\nPlease fill out this field.\n\n- [News](https:\/\/www.investopedia.com\/news-4427706)\n  News\n  \n  - [Markets](https:\/\/www.investopedia.com\/markets-news-4427704)\n  - [Companies](https:\/\/www.investopedia.com\/company-news-4427705)\n  - [Earnings](https:\/\/www.investopedia.com\/earnings-reports-5218419)\n  - [CD Rates](https:\/\/www.investopedia.com\/certificates-deposit-news-7111770)\n  - 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[Financial Literacy](https:\/\/www.investopedia.com\/financial-literacy-resource-center-7151950)\n  - [Retirement](https:\/\/www.investopedia.com\/retirement-planning-4689695)\n  - [View All](https:\/\/www.investopedia.com\/personal-finance-4427760)\n- [Economy](https:\/\/www.investopedia.com\/economy-4689801)\n  - [Government and Policy](https:\/\/www.investopedia.com\/government-and-policy-4689793)\n  - [Monetary Policy](https:\/\/www.investopedia.com\/monetary-policy-4689792)\n  - [Fiscal Policy](https:\/\/www.investopedia.com\/fiscal-policy-4689796)\n  - [Economics](https:\/\/www.investopedia.com\/economics-4689800)\n  - [View All](https:\/\/www.investopedia.com\/economy-4689801)\n- [Reviews](https:\/\/www.investopedia.com\/financial-product-reviews-7110783)\n  - [Best Online Brokers](https:\/\/www.investopedia.com\/best-online-brokers-4587872)\n  - [Best Crypto Exchanges](https:\/\/www.investopedia.com\/best-crypto-exchanges-5071855)\n  - [Best Savings Rates](https:\/\/www.investopedia.com\/high-yield-savings-accounts-4770633)\n  - [Best CD Rates](https:\/\/www.investopedia.com\/best-cd-rates-4770214)\n  - [Best Life Insurance](https:\/\/www.investopedia.com\/the-best-life-insurance-companies-8763666)\n  - [Best Mortgage Rates](https:\/\/www.investopedia.com\/mortgage-rates-5094943)\n  - [Best Robo-Advisors](https:\/\/www.investopedia.com\/the-best-robo-advisors-8764849)\n  - [Best Personal Loans](https:\/\/www.investopedia.com\/the-best-personal-loans-8761582)\n  - [Best Debt Relief Companies](https:\/\/www.investopedia.com\/the-best-debt-relief-companies-8763179)\n  - [View All](https:\/\/www.investopedia.com\/financial-product-reviews-7110783)\n\nTable of Contents\n\nExpand\n\nTable of Contents\n\n- [Trade Wars: The Basics](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-understanding-the-fundamentals-of-trade-wars)\n- [Trump’s Trade War](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-the-course-and-outcome-of-the-trade-war)\n- [Why China Plays a Major Role](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-why-china-plays-a-major-role)\n- [Impact on Consumers](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-impact-of-the-trade-war-on-american-consumers)\n- [FAQs](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-what-is-a-trade-war)\n- [The Bottom Line](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/#toc-the-bottom-line)\n\n# How a Trade War Could Impact Your Economy\nBy\n\n[Jacob Berstein](https:\/\/www.investopedia.com\/contributors\/101504\/)\n\n![]()\n\n![](https:\/\/www.investopedia.com\/thmb\/eIeRBP-6ylX08Vm7nSWRHG7N5zQ=\/200x200\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/img_2891-5bfc2631c9e77c0058760a29.jpg)\n\n[Full Bio](https:\/\/www.investopedia.com\/contributors\/101504\/)\n\nJacob Berstein is aan Investopedia contributor covering a range of topics, from trade wars to pharmaceuticals.\n\nLearn about our  [editorial policies](https:\/\/www.investopedia.com\/legal-4768893#editorial-policy)\n\nUpdated March 04, 2026\n\nReviewed by [Charles Potters](https:\/\/www.investopedia.com\/charles-potters-4942512)\n\nPart of the Series\n\nGlobal Trade Guide\n\n[International (Global) Trade: Definition, Benefits, and Criticisms](https:\/\/www.investopedia.com\/insights\/what-is-international-trade\/)\n\nTariffs\n\n1. [What are Tariffs?](https:\/\/www.investopedia.com\/news\/what-are-tariffs-and-how-do-they-affect-you\/)\n2. [Tariffs and Trade Barriers](https:\/\/www.investopedia.com\/articles\/economics\/08\/tariff-trade-barrier-basics.asp)\n3. [Trade Wars](https:\/\/www.investopedia.com\/terms\/t\/trade-war.asp)\n4. [How Would a Trade War Affect You?](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/)\n   CURRENT ARTICLE\n5. [Who Has the Highest Tariffs?](https:\/\/www.investopedia.com\/ask\/answers\/040115\/which-countries-have-highest-tariffs.asp)\n6. [Protectionism](https:\/\/www.investopedia.com\/terms\/p\/protectionism.asp)\n\nGlobal Players\n\n1. [The Plaza Accord](https:\/\/www.investopedia.com\/terms\/p\/plaza-accord.asp)\n2. [Currency Wars](https:\/\/www.investopedia.com\/articles\/forex\/042015\/what-currency-war-how-does-it-work.asp)\n3. [Factors Driving the USD](https:\/\/www.investopedia.com\/articles\/forex\/09\/factors-drive-american-dollar.asp)\n4. [Emerging Markets: The Parts of Russia's GDP](https:\/\/www.investopedia.com\/articles\/investing\/120615\/emerging-markets-analyzing-russias-gdp.asp)\n5. [How OPEC (and Non-OPEC) Production Affects Oil Prices](https:\/\/www.investopedia.com\/articles\/investing\/012216\/how-opec-and-nonopec-production-affects-oil-prices.asp)\n6. [BRICS: Acronym for Brazil, Russia, India, China, and South Africa](https:\/\/www.investopedia.com\/terms\/b\/brics.asp)\n7. [The Economy of Canada](https:\/\/www.investopedia.com\/articles\/investing\/042315\/fundamentals-how-canada-makes-its-money.asp)\n\nCurrency & Exchange Rates\n\n1. [How Currency Fluctuations Affect the Economy](https:\/\/www.investopedia.com\/articles\/forex\/080613\/effects-currency-fluctuations-economy.asp)\n2. [Devaluation](https:\/\/www.investopedia.com\/terms\/d\/devaluation.asp)\n3. [Manipulation](https:\/\/www.investopedia.com\/terms\/m\/manipulation.asp)\n4. [Revaluation](https:\/\/www.investopedia.com\/terms\/r\/revaluation.asp)\n5. [What is Fiat Money?](https:\/\/www.investopedia.com\/terms\/f\/fiatmoney.asp)\n6. [Yuan vs. Renminbi: What's the Difference?](https:\/\/www.investopedia.com\/articles\/forex\/061115\/yuan-vs-rmb-understanding-difference.asp)\n7. [What Causes a Currency Crisis?](https:\/\/www.investopedia.com\/articles\/economics\/08\/currency-crises.asp)\n\nCryptocurrencies and Global Trade\n\n1. [South Korea's Ties to Crypto](https:\/\/www.investopedia.com\/news\/why-south-korea-so-important-bitcoin-prices\/)\n2. [Sweden Takes First Steps on Crypto](https:\/\/www.investopedia.com\/sweden-takes-another-step-toward-a-digital-currency-5092069)\n\nCommodities\n\n1. [What is a Commodity?](https:\/\/www.investopedia.com\/terms\/c\/commodity.asp)\n2. [Tradable Commodities](https:\/\/www.investopedia.com\/ask\/answers\/022315\/what-are-tradable-commodities.asp)\n3. [Commodities Index](https:\/\/www.investopedia.com\/terms\/c\/commodityindices.asp)\n4. [10 Countries With The Most Natural Resources](https:\/\/www.investopedia.com\/articles\/markets-economy\/090516\/10-countries-most-natural-resources.asp)\n5. [What Causes Oil Prices to Fluctuate?](https:\/\/www.investopedia.com\/ask\/answers\/012715\/what-causes-oil-prices-fluctuate.asp)\n6. [What is a Crypto Commodity?](https:\/\/www.investopedia.com\/terms\/c\/crypto-commodity.asp)\n\n![Two containers being moved over water. One is wrapped in the colors of the American flag. The other wrapped in the Chinese flag. ](https:\/\/www.investopedia.com\/thmb\/K9K5jN8GvDlrdVG1uDaX1dz5a3E=\/1500x0\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1181979921-a8ef155393314f74ba585e98709af0a2.jpg)\n\n![Two containers being moved over water. One is wrapped in the colors of the American flag. The other wrapped in the Chinese flag. ](https:\/\/www.investopedia.com\/thmb\/K9K5jN8GvDlrdVG1uDaX1dz5a3E=\/1500x0\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/GettyImages-1181979921-a8ef155393314f74ba585e98709af0a2.jpg)\n\nYaorusheng \/ Getty Images\n\nClose\n\n### Key Takeaways\n- A trade war involves countries imposing economic restrictions like tariffs and embargoes.\n- Trade wars are meant to protect national interests, but can hurt local economies.\n- The U.S.-China trade war began in 2018 over disputed tariffs.\n- Tariffs can be a response when diplomatic trade efforts fail.\n- The U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance.\n\nOn 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 become the largest in world history.\n\nIn this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers.\n\n## Understanding the Fundamentals of Trade Wars\nThe term “[trade war](https:\/\/www.investopedia.com\/terms\/t\/trade-war.asp)” is used to describe an economic conflict where, in response to [protectionism](https:\/\/www.investopedia.com\/terms\/p\/protectionism.asp), countries impose trade barriers such as [tariffs](https:\/\/www.investopedia.com\/terms\/t\/tariff.asp), restrictions, and [quotas](https:\/\/www.investopedia.com\/terms\/q\/quota.asp) against each other.\n\nBasically, one country imposes targeted tariffs on another’s [economy](https:\/\/www.investopedia.com\/terms\/e\/economy.asp) in order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading practices of the latter are unfair.\n\n### Example of a Trade War\nLet’s say Country A and Country B both manufacture rubber chickens. County B then starts to subsidize its rubber chicken manufacturing. That means that the government of Country B is paying part of the cost of manufacturing, thus reducing the price for consumers.\n\nNow, 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 Country B’s rubber chickens, punishing Country B.\n\nIf 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 [tariff back-and-forth is considered a trade war](https:\/\/www.investopedia.com\/buffett-says-trump-tariffs-act-of-war-11689411).\n\nCountries get into conflicts over trade frequently. To sort them out, they can approach the [World Trade Organization (WTO)](https:\/\/www.investopedia.com\/investing\/what-is-the-world-trade-organization\/) 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.\n\n### Fast Fact\nThe U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement.\n## The Course and Outcome of the Trade War\n### America’s Action\nOn 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.\n\nWhile 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.\n\nPresident 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.\n\n### China’s Response\nIn 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)](https:\/\/www.investopedia.com\/terms\/g\/gdp.asp) in 2021), soybeans, and sorghum.\n\nCaught 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, perhaps hoping they’d pressure President Trump to lower the barriers.\n\n### The War Today\nDespite 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.\n\nIn 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.\n\n## Why China Plays a Major Role\n### Intellectual Property Theft\nSo, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest set of tariffs from the Trump administration came out of a federal investigation into Chinese intellectual property misdeeds.\n\nThe 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.\n\n### The Trade Deficit\nThe second reason concerned the U.S. [trade deficit](https:\/\/www.investopedia.com\/terms\/t\/trade_deficit.asp) 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.\n\nDonald 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices.\n\n## Impact of the Trade War on American Consumers\n### Effect of Tariffs\nThe effect of tariffs can be felt beyond the borders of the targeted country.\n\nIt’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved in the making and selling of goods before they reach their final destinations.\n\nWhen the U.S. put tariffs on China, the world’s largest manufacturing hub, it likely affected other countries, products, and companies that are part of the global supply chain.\n\nIn our global, interconnected economy, it is nearly impossible to target one country (or one industry) without affecting others, including allies.\n\n### Potential Threat to Consumers\nThese 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 of how raising tariffs and starting trade wars in a global economy might come back to hurt U.S. businesses and consumers.\n\nAmerican 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 stores. It is likely that some prices have gone up and more will do the same.\n\n## What Is a Trade War?\nA trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes.\n\n## What Is a Trade Deficit?\nA trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus.\n\n## Why Are Tariffs Necessary?\nThere are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step.\n## The Bottom Line\nTrade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018.\n\nHowever, in imposing tariffs, governments should bear in mind that [more than the target country may suffer](https:\/\/www.investopedia.com\/penguins-and-trumps-tariff-war-11711309). Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs.\n\nIn 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.\n\nArticle Sources\n\nInvestopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https:\/\/www.investopedia.com\/legal-4768893#EditorialPolicy)\n\n1. Los Angeles Times. “[Reagan Imposes 100% Tariffs on Japan Goods: Retaliatory Sanctions Aimed at \\$300 Million in Electronic Products in Semiconductor Dispute](https:\/\/www.latimes.com\/archives\/la-xpm-1987-03-28-mn-698-story.html).”\n2. Congressional Research Service Reports. “[China-U.S. Trade Issues](https:\/\/crsreports.congress.gov\/product\/pdf\/RL\/RL33536),” Page 64.\n3. Congressional Research Service Reports. “[The Made in China 2025 Initiative: Economic Implications for the United States](https:\/\/crsreports.congress.gov\/product\/pdf\/IF\/IF10964\/4).”\n4. U.S. Bureau of Economic Analysis. “[U.S. International Trade in Goods and Services, December 2021](https:\/\/www.bea.gov\/news\/2022\/us-international-trade-goods-and-services-december-2021).”\n5. National Pork Producers Council. “[The United States Pork Industry 2021: Current Structure and Economic Importance](https:\/\/nppc.org\/wp-content\/uploads\/2022\/07\/2021-NPPC-Economic-Contribution-Report-FINAL.pdf),” Pages 9–10.\n6. Congressional Research Service Reports. “[China-U.S. Trade Issues](https:\/\/crsreports.congress.gov\/product\/pdf\/RL\/RL33536),” Pages 68 and 74.\n7. CNN. \"[Biden Finalizes Increases to Some of Trump's China Tariffs](https:\/\/www.cnn.com\/2024\/09\/13\/politics\/china-tariffs-biden-trump\/index.html).\"\n8. The Guardian. “[What Are Tariffs and Why Is Trump Levying Them on Canada, Mexico, and China?](https:\/\/www.theguardian.com\/us-news\/2024\/nov\/27\/trump-tariffs-explained)”\n9. BBC. \"[Canada, Mexico and China Face Tariffs on Saturday, White House Says](https:\/\/www.bbc.com\/news\/articles\/ckg0m79gm10o).\"\n10. Congressional Research Service Reports. “[China-U.S. Trade Issues](https:\/\/crsreports.congress.gov\/product\/pdf\/RL\/RL33536),” Page 1.\n11. Congressional Research Service Reports. “[China-U.S. Trade Issues](https:\/\/crsreports.congress.gov\/product\/pdf\/RL\/RL33536).”\n12. U.S. Bureau of Economic Analysis. “[U.S. International Trade in Goods and Services, December 2020](https:\/\/www.bea.gov\/news\/2021\/us-international-trade-goods-and-services-december-2020).”\n13. Federal Reserve Bank of San Francisco. “[The U.S. Content of ‘Made in China’](https:\/\/www.frbsf.org\/economic-research\/publications\/economic-letter\/2011\/august\/us-made-in-china\/).”\n14. Wilson Center. “[The U.S.-China Trade War and the Tariff Weapons](https:\/\/www.wilsoncenter.org\/publication\/us-china-trade-war-and-tariff-weapons).”\n\nPart of the Series\n\nGlobal Trade Guide\n\n[International (Global) Trade: Definition, Benefits, and Criticisms](https:\/\/www.investopedia.com\/insights\/what-is-international-trade\/)\n\nTariffs\n\n1. [What are Tariffs?](https:\/\/www.investopedia.com\/news\/what-are-tariffs-and-how-do-they-affect-you\/)\n2. [Tariffs and Trade Barriers](https:\/\/www.investopedia.com\/articles\/economics\/08\/tariff-trade-barrier-basics.asp)\n3. [Trade Wars](https:\/\/www.investopedia.com\/terms\/t\/trade-war.asp)\n4. [How Would a Trade War Affect You?](https:\/\/www.investopedia.com\/insights\/how-would-trade-war-affect-you\/)\n   CURRENT ARTICLE\n5. [Who Has the Highest Tariffs?](https:\/\/www.investopedia.com\/ask\/answers\/040115\/which-countries-have-highest-tariffs.asp)\n6. [Protectionism](https:\/\/www.investopedia.com\/terms\/p\/protectionism.asp)\n\nGlobal Players\n\n1. [The Plaza Accord](https:\/\/www.investopedia.com\/terms\/p\/plaza-accord.asp)\n2. [Currency Wars](https:\/\/www.investopedia.com\/articles\/forex\/042015\/what-currency-war-how-does-it-work.asp)\n3. [Factors Driving the USD](https:\/\/www.investopedia.com\/articles\/forex\/09\/factors-drive-american-dollar.asp)\n4. [Emerging Markets: The Parts of Russia's GDP](https:\/\/www.investopedia.com\/articles\/investing\/120615\/emerging-markets-analyzing-russias-gdp.asp)\n5. [How OPEC (and Non-OPEC) Production Affects Oil Prices](https:\/\/www.investopedia.com\/articles\/investing\/012216\/how-opec-and-nonopec-production-affects-oil-prices.asp)\n6. [BRICS: Acronym for Brazil, Russia, India, China, and South Africa](https:\/\/www.investopedia.com\/terms\/b\/brics.asp)\n7. [The Economy of Canada](https:\/\/www.investopedia.com\/articles\/investing\/042315\/fundamentals-how-canada-makes-its-money.asp)\n\nCurrency & Exchange Rates\n\n1. [How Currency Fluctuations Affect the Economy](https:\/\/www.investopedia.com\/articles\/forex\/080613\/effects-currency-fluctuations-economy.asp)\n2. [Devaluation](https:\/\/www.investopedia.com\/terms\/d\/devaluation.asp)\n3. [Manipulation](https:\/\/www.investopedia.com\/terms\/m\/manipulation.asp)\n4. [Revaluation](https:\/\/www.investopedia.com\/terms\/r\/revaluation.asp)\n5. [What is Fiat Money?](https:\/\/www.investopedia.com\/terms\/f\/fiatmoney.asp)\n6. [Yuan vs. Renminbi: What's the Difference?](https:\/\/www.investopedia.com\/articles\/forex\/061115\/yuan-vs-rmb-understanding-difference.asp)\n7. [What Causes a Currency Crisis?](https:\/\/www.investopedia.com\/articles\/economics\/08\/currency-crises.asp)\n\nCryptocurrencies and Global Trade\n\n1. [South Korea's Ties to Crypto](https:\/\/www.investopedia.com\/news\/why-south-korea-so-important-bitcoin-prices\/)\n2. [Sweden Takes First Steps on Crypto](https:\/\/www.investopedia.com\/sweden-takes-another-step-toward-a-digital-currency-5092069)\n\nCommodities\n\n1. [What is a Commodity?](https:\/\/www.investopedia.com\/terms\/c\/commodity.asp)\n2. [Tradable Commodities](https:\/\/www.investopedia.com\/ask\/answers\/022315\/what-are-tradable-commodities.asp)\n3. [Commodities Index](https:\/\/www.investopedia.com\/terms\/c\/commodityindices.asp)\n4. [10 Countries With The Most Natural Resources](https:\/\/www.investopedia.com\/articles\/markets-economy\/090516\/10-countries-most-natural-resources.asp)\n5. [What Causes Oil Prices to Fluctuate?](https:\/\/www.investopedia.com\/ask\/answers\/012715\/what-causes-oil-prices-fluctuate.asp)\n6. [What is a Crypto Commodity?](https:\/\/www.investopedia.com\/terms\/c\/crypto-commodity.asp)\n\nRead more\n\n- [Economy](https:\/\/www.investopedia.com\/economy-4689801)\n- [Economics](https:\/\/www.investopedia.com\/economics-4689800)\n\nPartner Links\n\n## Related Articles\n[![]() ![](https:\/\/www.investopedia.com\/thmb\/zHwxMAlt_wpjyaA1DJE5j1KLbjE=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/wall_street_179681980-5bfc2b9746e0fb0083c07d29.jpg) Currency Wars: Causes, Impact on Global Trade, and Economic Strategies](https:\/\/www.investopedia.com\/articles\/forex\/042015\/what-currency-war-how-does-it-work.asp)\n\n[![Commodity]() ![Commodity](https:\/\/www.investopedia.com\/thmb\/qfMPj8z6h7o4cW7eyg4n2oX0D08=\/282x188\/filters:no_upscale\$\$:max_bytes\$150000\$:strip_icc\$\$\/commodity-4199120-1-911855241479465fb4e4f2f9d9d25c8a.jpg) Commodities in the Stock Market: Definition, Types, and Investment 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[Advertise](https:\/\/www.people.inc\/advertising)\n\n- [\\#](https:\/\/www.investopedia.com\/terms-beginning-with-num-4769350)\n- [A](https:\/\/www.investopedia.com\/terms-beginning-with-a-4769351)\n- [B](https:\/\/www.investopedia.com\/terms-beginning-with-b-4769352)\n- [C](https:\/\/www.investopedia.com\/terms-beginning-with-c-4769353)\n- [D](https:\/\/www.investopedia.com\/terms-beginning-with-d-4769354)\n- [E](https:\/\/www.investopedia.com\/terms-beginning-with-e-4769355)\n- [F](https:\/\/www.investopedia.com\/terms-beginning-with-f-4769356)\n- [G](https:\/\/www.investopedia.com\/terms-beginning-with-g-4769357)\n- [H](https:\/\/www.investopedia.com\/terms-beginning-with-h-4769358)\n- [I](https:\/\/www.investopedia.com\/terms-beginning-with-i-4769359)\n- [J](https:\/\/www.investopedia.com\/terms-beginning-with-j-4769360)\n- [K](https:\/\/www.investopedia.com\/terms-beginning-with-k-4769361)\n- [L](https:\/\/www.investopedia.com\/terms-beginning-with-l-4769362)\n- 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[Z](https:\/\/www.investopedia.com\/terms-beginning-with-z-4769376)\n\nInvestopedia is part of the [People Inc.](https:\/\/www.people.inc\/) publishing family.\n\nNewsletter Sign Up\n\nNewsletter Sign Up","attrs_readable_markdown":"### Key Takeaways\n- A trade war involves countries imposing economic restrictions like tariffs and embargoes.\n- Trade wars are meant to protect national interests, but can hurt local economies.\n- The U.S.-China trade war began in 2018 over disputed tariffs.\n- Tariffs can be a response when diplomatic trade efforts fail.\n- The U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance.\n\nOn 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 become the largest in world history.\n\nIn this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers.\n\n## Understanding the Fundamentals of Trade Wars\nThe term “[trade war](https:\/\/www.investopedia.com\/terms\/t\/trade-war.asp)” is used to describe an economic conflict where, in response to [protectionism](https:\/\/www.investopedia.com\/terms\/p\/protectionism.asp), countries impose trade barriers such as [tariffs](https:\/\/www.investopedia.com\/terms\/t\/tariff.asp), restrictions, and [quotas](https:\/\/www.investopedia.com\/terms\/q\/quota.asp) against each other.\n\nBasically, one country imposes targeted tariffs on another’s [economy](https:\/\/www.investopedia.com\/terms\/e\/economy.asp) in order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading practices of the latter are unfair.\n\n### Example of a Trade War\nLet’s say Country A and Country B both manufacture rubber chickens. County B then starts to subsidize its rubber chicken manufacturing. That means that the government of Country B is paying part of the cost of manufacturing, thus reducing the price for consumers.\n\nNow, 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 Country B’s rubber chickens, punishing Country B.\n\nIf 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 [tariff back-and-forth is considered a trade war](https:\/\/www.investopedia.com\/buffett-says-trump-tariffs-act-of-war-11689411).\n\nCountries get into conflicts over trade frequently. To sort them out, they can approach the [World Trade Organization (WTO)](https:\/\/www.investopedia.com\/investing\/what-is-the-world-trade-organization\/) 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.\n\n### Fast Fact\nThe U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement.\n## The Course and Outcome of the Trade War\n### America’s Action\nOn 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.\n\nWhile 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.\n\nPresident 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.\n\n### China’s Response\nIn 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)](https:\/\/www.investopedia.com\/terms\/g\/gdp.asp) in 2021), soybeans, and sorghum.\n\nCaught 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, perhaps hoping they’d pressure President Trump to lower the barriers.\n\n### The War Today\nDespite 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.\n\nIn 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.\n\n## Why China Plays a Major Role\n### Intellectual Property Theft\nSo, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest set of tariffs from the Trump administration came out of a federal investigation into Chinese intellectual property misdeeds.\n\nThe 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.\n\n### The Trade Deficit\nThe second reason concerned the U.S. [trade deficit](https:\/\/www.investopedia.com\/terms\/t\/trade_deficit.asp) 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.\n\nDonald 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices.\n\n## Impact of the Trade War on American Consumers\n### Effect of Tariffs\nThe effect of tariffs can be felt beyond the borders of the targeted country.\n\nIt’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved in the making and selling of goods before they reach their final destinations.\n\nWhen the U.S. put tariffs on China, the world’s largest manufacturing hub, it likely affected other countries, products, and companies that are part of the global supply chain.\n\nIn our global, interconnected economy, it is nearly impossible to target one country (or one industry) without affecting others, including allies.\n\n### Potential Threat to Consumers\nThese 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 of how raising tariffs and starting trade wars in a global economy might come back to hurt U.S. businesses and consumers.\n\nAmerican 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 stores. It is likely that some prices have gone up and more will do the same.\n\n## What Is a Trade War?\nA trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes.\n\n## What Is a Trade Deficit?\nA trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus.\n\n## Why Are Tariffs Necessary?\nThere are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step.\n## The Bottom Line\nTrade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018.\n\nHowever, in imposing tariffs, governments should bear in mind that [more than the target country may suffer](https:\/\/www.investopedia.com\/penguins-and-trumps-tariff-war-11711309). Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs.\n\nIn 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.","meta_canonical":null}

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Boilerpipe Text	Key Takeaways A trade war involves countries imposing economic restrictions like tariffs and embargoes. Trade wars are meant to protect national interests, but can hurt local economies. The U.S.-China trade war began in 2018 over disputed tariffs. Tariffs can be a response when diplomatic trade efforts fail. The U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance. 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 become the largest in world history. In this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers. Understanding the Fundamentals of Trade Wars The term “ trade war ” is used to describe an economic conflict where, in response to 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 trading 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 manufacturing. 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 Country 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 tariff back-and-forth is considered a trade war . Countries get into conflicts over trade frequently. To sort them out, they can approach the 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. Fast Fact The U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement. The Course and Outcome of the Trade War 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, perhaps 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 Plays a Major Role Intellectual Property Theft So, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest 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. 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices. Impact of the Trade War on American Consumers Effect of Tariffs The effect of tariffs can be felt beyond the borders of the targeted country. It’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved 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 part 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 of 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 stores. It is likely that some prices have gone up and more will do the same. What Is a Trade War? A trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes. What Is a Trade Deficit? A trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus. Why Are Tariffs Necessary? There are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step. The Bottom Line Trade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018. However, in imposing tariffs, governments should bear in mind that more than the target country may suffer . Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs. 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.
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[Impact on Consumers](https://www.investopedia.com/insights/how-would-trade-war-affect-you/#toc-impact-of-the-trade-war-on-american-consumers) - [FAQs](https://www.investopedia.com/insights/how-would-trade-war-affect-you/#toc-what-is-a-trade-war) - [The Bottom Line](https://www.investopedia.com/insights/how-would-trade-war-affect-you/#toc-the-bottom-line) # How a Trade War Could Impact Your Economy By [Jacob Berstein](https://www.investopedia.com/contributors/101504/) ![]() ![](https://www.investopedia.com/thmb/eIeRBP-6ylX08Vm7nSWRHG7N5zQ=/200x200/filters:no_upscale:max_bytes$150000$:strip_icc/img_2891-5bfc2631c9e77c0058760a29.jpg) [Full Bio](https://www.investopedia.com/contributors/101504/) Jacob Berstein is aan Investopedia contributor covering a range of topics, from trade wars to pharmaceuticals. Learn about our [editorial policies](https://www.investopedia.com/legal-4768893#editorial-policy) Updated March 04, 2026 Reviewed by [Charles Potters](https://www.investopedia.com/charles-potters-4942512) Part of the Series Global Trade Guide [International (Global) Trade: Definition, Benefits, and Criticisms](https://www.investopedia.com/insights/what-is-international-trade/) Tariffs 1. [What are Tariffs?](https://www.investopedia.com/news/what-are-tariffs-and-how-do-they-affect-you/) 2. [Tariffs and Trade Barriers](https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp) 3. [Trade Wars](https://www.investopedia.com/terms/t/trade-war.asp) 4. [How Would a Trade War Affect You?](https://www.investopedia.com/insights/how-would-trade-war-affect-you/) CURRENT ARTICLE 5. [Who Has the Highest Tariffs?](https://www.investopedia.com/ask/answers/040115/which-countries-have-highest-tariffs.asp) 6. [Protectionism](https://www.investopedia.com/terms/p/protectionism.asp) Global Players 1. [The Plaza Accord](https://www.investopedia.com/terms/p/plaza-accord.asp) 2. [Currency Wars](https://www.investopedia.com/articles/forex/042015/what-currency-war-how-does-it-work.asp) 3. [Factors Driving the USD](https://www.investopedia.com/articles/forex/09/factors-drive-american-dollar.asp) 4. [Emerging Markets: The Parts of Russia's GDP](https://www.investopedia.com/articles/investing/120615/emerging-markets-analyzing-russias-gdp.asp) 5. [How OPEC (and Non-OPEC) Production Affects Oil Prices](https://www.investopedia.com/articles/investing/012216/how-opec-and-nonopec-production-affects-oil-prices.asp) 6. [BRICS: Acronym for Brazil, Russia, India, China, and South Africa](https://www.investopedia.com/terms/b/brics.asp) 7. [The Economy of Canada](https://www.investopedia.com/articles/investing/042315/fundamentals-how-canada-makes-its-money.asp) Currency & Exchange Rates 1. [How Currency Fluctuations Affect the Economy](https://www.investopedia.com/articles/forex/080613/effects-currency-fluctuations-economy.asp) 2. [Devaluation](https://www.investopedia.com/terms/d/devaluation.asp) 3. [Manipulation](https://www.investopedia.com/terms/m/manipulation.asp) 4. [Revaluation](https://www.investopedia.com/terms/r/revaluation.asp) 5. [What is Fiat Money?](https://www.investopedia.com/terms/f/fiatmoney.asp) 6. [Yuan vs. Renminbi: What's the Difference?](https://www.investopedia.com/articles/forex/061115/yuan-vs-rmb-understanding-difference.asp) 7. [What Causes a Currency Crisis?](https://www.investopedia.com/articles/economics/08/currency-crises.asp) Cryptocurrencies and Global Trade 1. [South Korea's Ties to Crypto](https://www.investopedia.com/news/why-south-korea-so-important-bitcoin-prices/) 2. [Sweden Takes First Steps on Crypto](https://www.investopedia.com/sweden-takes-another-step-toward-a-digital-currency-5092069) Commodities 1. [What is a Commodity?](https://www.investopedia.com/terms/c/commodity.asp) 2. [Tradable Commodities](https://www.investopedia.com/ask/answers/022315/what-are-tradable-commodities.asp) 3. [Commodities Index](https://www.investopedia.com/terms/c/commodityindices.asp) 4. [10 Countries With The Most Natural Resources](https://www.investopedia.com/articles/markets-economy/090516/10-countries-most-natural-resources.asp) 5. [What Causes Oil Prices to Fluctuate?](https://www.investopedia.com/ask/answers/012715/what-causes-oil-prices-fluctuate.asp) 6. [What is a Crypto Commodity?](https://www.investopedia.com/terms/c/crypto-commodity.asp) ![Two containers being moved over water. One is wrapped in the colors of the American flag. The other wrapped in the Chinese flag. ](https://www.investopedia.com/thmb/K9K5jN8GvDlrdVG1uDaX1dz5a3E=/1500x0/filters:no_upscale:max_bytes$150000$:strip_icc/GettyImages-1181979921-a8ef155393314f74ba585e98709af0a2.jpg) ![Two containers being moved over water. One is wrapped in the colors of the American flag. The other wrapped in the Chinese flag. ](https://www.investopedia.com/thmb/K9K5jN8GvDlrdVG1uDaX1dz5a3E=/1500x0/filters:no_upscale:max_bytes$150000$:strip_icc/GettyImages-1181979921-a8ef155393314f74ba585e98709af0a2.jpg) Yaorusheng / Getty Images Close ### Key Takeaways - A trade war involves countries imposing economic restrictions like tariffs and embargoes. - Trade wars are meant to protect national interests, but can hurt local economies. - The U.S.-China trade war began in 2018 over disputed tariffs. - Tariffs can be a response when diplomatic trade efforts fail. - The U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance. 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 become the largest in world history. In this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers. ## Understanding the Fundamentals of Trade Wars The term “[trade war](https://www.investopedia.com/terms/t/trade-war.asp)” is used to describe an economic conflict where, in response to [protectionism](https://www.investopedia.com/terms/p/protectionism.asp), countries impose trade barriers such as [tariffs](https://www.investopedia.com/terms/t/tariff.asp), restrictions, and [quotas](https://www.investopedia.com/terms/q/quota.asp) against each other. Basically, one country imposes targeted tariffs on another’s [economy](https://www.investopedia.com/terms/e/economy.asp) in order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading 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 manufacturing. 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 Country 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 [tariff back-and-forth is considered a trade war](https://www.investopedia.com/buffett-says-trump-tariffs-act-of-war-11689411). Countries get into conflicts over trade frequently. To sort them out, they can approach the [World Trade Organization (WTO)](https://www.investopedia.com/investing/what-is-the-world-trade-organization/) 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. ### Fast Fact The U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement. ## The Course and Outcome of the Trade War ### 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)](https://www.investopedia.com/terms/g/gdp.asp) 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, perhaps 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 Plays a Major Role ### Intellectual Property Theft So, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest 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. [trade deficit](https://www.investopedia.com/terms/t/trade_deficit.asp) 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices. ## Impact of the Trade War on American Consumers ### Effect of Tariffs The effect of tariffs can be felt beyond the borders of the targeted country. It’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved 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 part 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 of 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 stores. It is likely that some prices have gone up and more will do the same. ## What Is a Trade War? A trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes. ## What Is a Trade Deficit? A trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus. ## Why Are Tariffs Necessary? There are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step. ## The Bottom Line Trade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018. However, in imposing tariffs, governments should bear in mind that [more than the target country may suffer](https://www.investopedia.com/penguins-and-trumps-tariff-war-11711309). Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs. 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. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our [editorial policy.](https://www.investopedia.com/legal-4768893#EditorialPolicy) 1. Los Angeles Times. “[Reagan Imposes 100% Tariffs on Japan Goods: Retaliatory Sanctions Aimed at \$300 Million in Electronic Products in Semiconductor Dispute](https://www.latimes.com/archives/la-xpm-1987-03-28-mn-698-story.html).” 2. Congressional Research Service Reports. “[China-U.S. Trade Issues](https://crsreports.congress.gov/product/pdf/RL/RL33536),” Page 64. 3. Congressional Research Service Reports. “[The Made in China 2025 Initiative: Economic Implications for the United States](https://crsreports.congress.gov/product/pdf/IF/IF10964/4).” 4. U.S. Bureau of Economic Analysis. “[U.S. International Trade in Goods and Services, December 2021](https://www.bea.gov/news/2022/us-international-trade-goods-and-services-december-2021).” 5. National Pork Producers Council. “[The United States Pork Industry 2021: Current Structure and Economic Importance](https://nppc.org/wp-content/uploads/2022/07/2021-NPPC-Economic-Contribution-Report-FINAL.pdf),” Pages 9–10. 6. Congressional Research Service Reports. “[China-U.S. Trade Issues](https://crsreports.congress.gov/product/pdf/RL/RL33536),” Pages 68 and 74. 7. CNN. "[Biden Finalizes Increases to Some of Trump's China Tariffs](https://www.cnn.com/2024/09/13/politics/china-tariffs-biden-trump/index.html)." 8. The Guardian. “[What Are Tariffs and Why Is Trump Levying Them on Canada, Mexico, and China?](https://www.theguardian.com/us-news/2024/nov/27/trump-tariffs-explained)” 9. BBC. "[Canada, Mexico and China Face Tariffs on Saturday, White House Says](https://www.bbc.com/news/articles/ckg0m79gm10o)." 10. Congressional Research Service Reports. “[China-U.S. Trade Issues](https://crsreports.congress.gov/product/pdf/RL/RL33536),” Page 1. 11. Congressional Research Service Reports. “[China-U.S. Trade Issues](https://crsreports.congress.gov/product/pdf/RL/RL33536).” 12. U.S. Bureau of Economic Analysis. “[U.S. International Trade in Goods and Services, December 2020](https://www.bea.gov/news/2021/us-international-trade-goods-and-services-december-2020).” 13. Federal Reserve Bank of San Francisco. “[The U.S. Content of ‘Made in China’](https://www.frbsf.org/economic-research/publications/economic-letter/2011/august/us-made-in-china/).” 14. Wilson Center. “[The U.S.-China Trade War and the Tariff Weapons](https://www.wilsoncenter.org/publication/us-china-trade-war-and-tariff-weapons).” Part of the Series Global Trade Guide [International (Global) Trade: Definition, Benefits, and Criticisms](https://www.investopedia.com/insights/what-is-international-trade/) Tariffs 1. [What are Tariffs?](https://www.investopedia.com/news/what-are-tariffs-and-how-do-they-affect-you/) 2. [Tariffs and Trade Barriers](https://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp) 3. [Trade Wars](https://www.investopedia.com/terms/t/trade-war.asp) 4. [How Would a Trade War Affect You?](https://www.investopedia.com/insights/how-would-trade-war-affect-you/) CURRENT ARTICLE 5. 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Readable Markdown	### Key Takeaways - A trade war involves countries imposing economic restrictions like tariffs and embargoes. - Trade wars are meant to protect national interests, but can hurt local economies. - The U.S.-China trade war began in 2018 over disputed tariffs. - Tariffs can be a response when diplomatic trade efforts fail. - The U.S. imposed tariffs on Japanese electronics in the 1980s to correct the trade imbalance. 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 become the largest in world history. In this article, we take a look at what trade wars can mean for the disputing countries, businesses, and consumers. ## Understanding the Fundamentals of Trade Wars The term “[trade war](https://www.investopedia.com/terms/t/trade-war.asp)” is used to describe an economic conflict where, in response to [protectionism](https://www.investopedia.com/terms/p/protectionism.asp), countries impose trade barriers such as [tariffs](https://www.investopedia.com/terms/t/tariff.asp), restrictions, and [quotas](https://www.investopedia.com/terms/q/quota.asp) against each other. Basically, one country imposes targeted tariffs on another’s [economy](https://www.investopedia.com/terms/e/economy.asp) in order to protect its own economy, or to hurt that of its adversary. The former may believe that the trading 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 manufacturing. 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 Country 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 [tariff back-and-forth is considered a trade war](https://www.investopedia.com/buffett-says-trump-tariffs-act-of-war-11689411). Countries get into conflicts over trade frequently. To sort them out, they can approach the [World Trade Organization (WTO)](https://www.investopedia.com/investing/what-is-the-world-trade-organization/) 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. ### Fast Fact The U.S. trade war with Japan in the 1980s was meant to correct the trade imbalance involving electronics. President Ronald Reagan imposed 100% tariffs on products made by major Japanese manufacturers to punish Japan for breaching its trade agreement. ## The Course and Outcome of the Trade War ### 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)](https://www.investopedia.com/terms/g/gdp.asp) 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, perhaps 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 Plays a Major Role ### Intellectual Property Theft So, why was China hit with tariffs? The first reason points to growing concerns about Chinese economic espionage. The largest 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. [trade deficit](https://www.investopedia.com/terms/t/trade_deficit.asp) 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 administration imposed these tariffs, hoping to reverse the growth of the U.S. trade deficit and punish China for its trading practices. ## Impact of the Trade War on American Consumers ### Effect of Tariffs The effect of tariffs can be felt beyond the borders of the targeted country. It’s important to understand that U.S.-China trade does not take place in a vacuum. Trade is part of a global economy. Different countries can be involved 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 part 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 of 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 stores. It is likely that some prices have gone up and more will do the same. ## What Is a Trade War? A trade war is an economic battle that countries wage on one another to address protectionist policies seen as barriers to trade. Trade wars involve imposing various economic restrictions, such as tariffs and embargoes. ## What Is a Trade Deficit? A trade deficit is the imbalance between how much a country takes in for its exports and how much it spends on imports. If imports exceed exports, the country has a trade deficit. If exports exceed imports, the country has a trade surplus. ## Why Are Tariffs Necessary? There are various viewpoints regarding the need for tariffs. However, when diplomatic efforts related to trade (and other unfortunate behavior such as theft of business secrets or intellectual property) fail to resolve adversarial positions, tariffs and other punitive actions are sometimes the next step. ## The Bottom Line Trade wars are economic battles between countries that seek redress for wrongful economic actions that pose a threat to a country’s economic well-being. Tariffs can be part of those battles, as seen in the ongoing conflict between the U.S. and China, which began in 2018. However, in imposing tariffs, governments should bear in mind that [more than the target country may suffer](https://www.investopedia.com/penguins-and-trumps-tariff-war-11711309). Economies operate on a global scale, and the costs of tariffs often trickle down to domestic businesses and everyday consumers. For example, when companies face higher costs due to new tariffs. 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.
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