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What’s Happening with the Trade War?
The U.S. may impose more tariffs on Chinese imports.
Update:
On January 15, 2020 President Trump
signed
the first part of a trade deal with China. Under the terms of the deal, the U.S. will no longer label China as a currency manipulator and China will buy $200 billion worth of American products over the next two years. While
tariffs
on $250 billion worth of Chinese goods will remain in place for now, the United States canceled plans to further raise tariffs.
Trade wars can have real consequences, and their impact on markets and economies can be big.
In fact, markets in the U.S. continued
to slide on
Monday, May 13 as President Trump announced
the U.S. will double tariffs
on $200 billion worth of Chinese imports. China has responded by saying it will add new tariffs of its own on $60 billion of U.S. exports.
Read on and we’ll explain how trade wars can affect you and the economy.
So what’s a trade war?
Simply put, a trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
A
tariff
, sometimes called a duty,  is a tax imposed by one nation on another’s imports. (In some cases, tariffs can be “levied”–or placed–on
exports
.) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.
Governments tend to impose tariffs on another’s goods to make their own products more competitive and affordable, and to generate revenues.
Until recently, the U.S. has generally refrained from increasing tariffs and entering into trade wars with other countries.
Trade wars and trade agreements
In fact, over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars.
You may be familiar with the North American Free Trade Agreement (
NAFTA
). These treaties are complex
multilateral agreements
that favor negotiations between all countries that sign.
Agreements like this reduced the threat of trade wars, in part by eliminating many
tariffs
on exported and imported products.
Trump
reversed course in 2018
, arguing such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete. Trump has said that products from China–in particular
steel
–have cost the U.S. millions of jobs, and have caused thousands of factories to close. Economists reportedly
dispute
these figures.
But it’s not just China. In fact, since last year the U.S. has imposed tariffs on a wide variety of overseas items, from countries as diverse as South Korea and Mexico, even Germany and France. And in response,
numerous countries
, including China, have imposed their own tariffs on U.S. exports.
Impact on the economy
The trade war appears to be having a negative impact on U.S. farmers, according to
reports
that suggest the nation’s growers lost about $12 billion in the first quarter of 2019. Sales of
soybeans
to China were particularly hard hit.
The U.S. spirits industry, producers of whiskey and other hard alcohol, have experienced declining exports not only to China, but to Europe, Canada, and Mexico, where new U.S. tariffs on products have also caused trade tensions, according to
sources
.
U.S. consumers paid an estimated $12 billion in tariffs since 2018, according to
reports
. And they are experiencing higher prices on a wide range of items including
dryers
,
lumber
,
cars
, and clothing, shoes, and furniture,
among others
.
How trade wars affect markets
Sometimes the stock market can react to tariff wars.
That’s what happened this week, and also back in March 2018, when the Trump administration announced it would addÂ
new tariffs
 to foreign aluminum and steel. The stock market dropped last year at the prospect that goods and services could begin to cost more for consumers.
Similarly, uneasiness about whether the U.S. and China are coming to any agreements about trade have caused markets to swing throughout 2019. Not only does the U.S.
import billions
of dollars worth of products from China, U.S. companies
export billions
of dollars worth of goods to China.
Remember the Stash Way
Try not to pay too much attention to what happens to the stock market in the short run, as markets tend to be
volatile
, and move up and down. Trade wars can affect markets, but so can many other things.
That’s why Stash has boiled down its investing philosophy into a three-step strategy we call the
Stash Way
. It involves investing for the long term, regular investing, and diversification. You can learn more about the Stash Way
here
.
Investing made easy.
Start today with any dollar amount.
Related articles
Invest in yourself.
By using this website you agree to our
Terms of Use
and
Privacy Policy
. To begin investing on Stash, you must be approved from an account verification perspective and open a brokerage account. |
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[Home](https://www.stash.com/learn/) / [financial-news](https://www.stash.com/learn/financial-news/) / What’s Happening with the Trade War?
[financial-news](https://www.stash.com/learn/financial-news)
Jan 21, 2020
# What’s Happening with the Trade War?
By [Team Stash](https://www.stash.com/learn/author/team-stash)
The U.S. may impose more tariffs on Chinese imports.
Link Copied
#### In this article:
1. [**So what’s a trade war?**](https://www.stash.com/learn/whats-happening-with-the-trade-war/#so-whats-a-trade-war)
2. [**Trade wars and trade agreements**](https://www.stash.com/learn/whats-happening-with-the-trade-war/#trade-wars-and-trade-agreements)
3. [**Impact on the economy**](https://www.stash.com/learn/whats-happening-with-the-trade-war/#impact-on-the-economy)
4. [**How trade wars affect markets**](https://www.stash.com/learn/whats-happening-with-the-trade-war/#how-trade-wars-affect-markets)
5. [**Remember the Stash Way**](https://www.stash.com/learn/whats-happening-with-the-trade-war/#remember-the-stash-way)
**Update:** On January 15, 2020 President Trump [signed](https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html) the first part of a trade deal with China. Under the terms of the deal, the U.S. will no longer label China as a currency manipulator and China will buy \$200 billion worth of American products over the next two years. While [tariffs](https://www.stash.com/learn/whats-happening-with-the-trade-war) on \$250 billion worth of Chinese goods will remain in place for now, the United States canceled plans to further raise tariffs.
Trade wars can have real consequences, and their impact on markets and economies can be big.
In fact, markets in the U.S. continued [to slide on](https://www.cnbc.com/2019/05/13/us-markets-react-to-china-trade-war-news-and-more.html) Monday, May 13 as President Trump announced [the U.S. will double tariffs](https://www.cnbc.com/2019/05/10/us-markets-as-higher-tariffs-on-chinese-goods-kick-in.html) on \$200 billion worth of Chinese imports. China has responded by saying it will add new tariffs of its own on \$60 billion of U.S. exports.
Read on and we’ll explain how trade wars can affect you and the economy.
## So what’s a trade war?
Simply put, a trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
A [tariff](https://www.export.gov/article?id=Tariff-and-Import-Fees), sometimes called a duty, is a tax imposed by one nation on another’s imports. (In some cases, tariffs can be “levied”–or placed–on [exports](https://stats.oecd.org/glossary/detail.asp?ID=910).) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.
Governments tend to impose tariffs on another’s goods to make their own products more competitive and affordable, and to generate revenues.
Until recently, the U.S. has generally refrained from increasing tariffs and entering into trade wars with other countries.
## Trade wars and trade agreements
In fact, over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars.
You may be familiar with the North American Free Trade Agreement ([NAFTA](https://www.bloomberg.com/news/articles/2018-03-02/trump-s-steel-and-aluminum-trade-threat-hangs-over-nafta-talks)). These treaties are complex [multilateral agreements](https://www.nber.org/chapters/c6899.pdf) that favor negotiations between all countries that sign.
Agreements like this reduced the threat of trade wars, in part by eliminating many [tariffs](https://www.cbp.gov/trade/nafta) on exported and imported products.
Trump [reversed course in 2018](https://www.stash.com/learn/trumps-tariffs-on-aluminum-and-steel-whats-the-big-deal), arguing such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete. Trump has said that products from China–in particular [steel](https://www.marketwatch.com/story/tariffs-on-steel-aluminum-are-long-overdue-2018-03-02)–have cost the U.S. millions of jobs, and have caused thousands of factories to close. Economists reportedly [dispute](https://www.washingtonpost.com/business/economy/trump-moves-to-crack-down-on-china-trade-with-50-billion-in-tariffs-on-imported-products/2018/03/22/c09309e8-2de3-11e8-8ad6-fbc50284fce8_story.html?utm_term=.81a89d9a1224) these figures.
But it’s not just China. In fact, since last year the U.S. has imposed tariffs on a wide variety of overseas items, from countries as diverse as South Korea and Mexico, even Germany and France. And in response, [numerous countries](https://www.reuters.com/article/us-usa-trade-tariffs-factbox/factbox-tariff-wars-duties-imposed-by-trump-and-us-trading-partners-idUSKCN1SB0SA), including China, have imposed their own tariffs on U.S. exports.
## Impact on the economy
- The trade war appears to be having a negative impact on U.S. farmers, according to [reports](https://www.bloomberg.com/news/articles/2019-04-29/farmer-income-drops-most-since-2016-amid-trump-trade-war-pain) that suggest the nation’s growers lost about \$12 billion in the first quarter of 2019. Sales of [soybeans](https://www.bloomberg.com/opinion/articles/2019-04-16/trump-s-trade-war-with-china-doesn-t-look-like-a-win) to China were particularly hard hit.
- The U.S. spirits industry, producers of whiskey and other hard alcohol, have experienced declining exports not only to China, but to Europe, Canada, and Mexico, where new U.S. tariffs on products have also caused trade tensions, according to [sources](https://www.nytimes.com/2019/02/12/us/politics/china-tariffs-american-spirits.html).
- U.S. consumers paid an estimated \$12 billion in tariffs since 2018, according to [reports](https://qz.com/1564566/trumps-trade-war-has-cost-the-us-at-least-19-billion/). And they are experiencing higher prices on a wide range of items including [dryers](https://www.nytimes.com/2019/01/25/business/economy/how-tariffs-stained-the-washing-machine-market.html), [lumber](https://www.bloomberg.com/news/articles/2018-03-05/trump-s-tariff-is-forcing-homebuilders-to-cut-costs), [cars](https://www.experian.com/blogs/ask-experian/trade-war-heres-a-list-of-products-that-will-cost-more/), and clothing, shoes, and furniture, [among others](https://www.cnbc.com/2018/09/21/target-deeply-troubled-over-trumps-tariffs-as-retailers-push-back.html).
## How trade wars affect markets
Sometimes the stock market can react to tariff wars.
That’s what happened this week, and also back in March 2018, when the Trump administration announced it would add [new tariffs](https://www.stash.com/learn/trumps-tariffs-on-aluminum-and-steel-whats-the-big-deal) to foreign aluminum and steel. The stock market dropped last year at the prospect that goods and services could begin to cost more for consumers.
Similarly, uneasiness about whether the U.S. and China are coming to any agreements about trade have caused markets to swing throughout 2019. Not only does the U.S. [import billions](https://www.census.gov/foreign-trade/balance/c5700.html) of dollars worth of products from China, U.S. companies [export billions](https://www.census.gov/foreign-trade/balance/c5700.html) of dollars worth of goods to China.
## Remember the Stash Way
Try not to pay too much attention to what happens to the stock market in the short run, as markets tend to be [volatile](https://www.stash.com/learn/the-stash-way-volatility), and move up and down. Trade wars can affect markets, but so can many other things.
That’s why Stash has boiled down its investing philosophy into a three-step strategy we call the [Stash Way](https://www.stash.com/learn/the-stash-way). It involves investing for the long term, regular investing, and diversification. You can learn more about the Stash Way [here](https://www.stash.com/learn/the-stash-way-think-long-term).
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We want to turn money into a source of hope and opportunity. We teach people how to build good habits, save more and make it easy and affordable to get started investing. So far, we’ve helped over 6 million people create a more secure financial future with our expert advice and award winning investing app.
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## Related articles
[financial-news Apr 07, 2025Investing During Volatile Times](https://www.stash.com/learn/investing-during-volatile-times/)
[financial-news Apr 03, 2025How to Stay the Course Through Tariffs and Turbulence](https://www.stash.com/learn/how-to-stay-the-course-through-tariffs-and-turbulence/)
[financial-news May 15, 2024Rebirth of the meme stock craze? 5 brutally honest reasons why you shouldn’t be buying, despite the hype](https://www.stash.com/learn/meme-stock-surge/)
[budgeting Jan 09, 20249 ways to celebrate financial wellness month](https://www.stash.com/learn/financial-wellness-month/)
[financial-news Nov 09, 2023What is a Recession?](https://www.stash.com/learn/what-is-a-recession/)
[financial-news May 15, 2023The Stash Way: Invest Regularly](https://www.stash.com/learn/the-stash-way-invest-regularly/)
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| Readable Markdown | [Home](https://www.stash.com/learn/) / [financial-news](https://www.stash.com/learn/financial-news/) / What’s Happening with the Trade War?
The U.S. may impose more tariffs on Chinese imports.
**Update:** On January 15, 2020 President Trump [signed](https://www.nytimes.com/2020/01/15/business/economy/china-trade-deal.html) the first part of a trade deal with China. Under the terms of the deal, the U.S. will no longer label China as a currency manipulator and China will buy \$200 billion worth of American products over the next two years. While [tariffs](https://www.stash.com/learn/whats-happening-with-the-trade-war) on \$250 billion worth of Chinese goods will remain in place for now, the United States canceled plans to further raise tariffs.
Trade wars can have real consequences, and their impact on markets and economies can be big.
In fact, markets in the U.S. continued [to slide on](https://www.cnbc.com/2019/05/13/us-markets-react-to-china-trade-war-news-and-more.html) Monday, May 13 as President Trump announced [the U.S. will double tariffs](https://www.cnbc.com/2019/05/10/us-markets-as-higher-tariffs-on-chinese-goods-kick-in.html) on \$200 billion worth of Chinese imports. China has responded by saying it will add new tariffs of its own on \$60 billion of U.S. exports.
Read on and we’ll explain how trade wars can affect you and the economy.
## So what’s a trade war?
Simply put, a trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.
A [tariff](https://www.export.gov/article?id=Tariff-and-Import-Fees), sometimes called a duty, is a tax imposed by one nation on another’s imports. (In some cases, tariffs can be “levied”–or placed–on [exports](https://stats.oecd.org/glossary/detail.asp?ID=910).) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.
Governments tend to impose tariffs on another’s goods to make their own products more competitive and affordable, and to generate revenues.
Until recently, the U.S. has generally refrained from increasing tariffs and entering into trade wars with other countries.
## Trade wars and trade agreements
In fact, over the last 30 years, the U.S. has signed numerous trade treaties to avoid trade wars.
You may be familiar with the North American Free Trade Agreement ([NAFTA](https://www.bloomberg.com/news/articles/2018-03-02/trump-s-steel-and-aluminum-trade-threat-hangs-over-nafta-talks)). These treaties are complex [multilateral agreements](https://www.nber.org/chapters/c6899.pdf) that favor negotiations between all countries that sign.
Agreements like this reduced the threat of trade wars, in part by eliminating many [tariffs](https://www.cbp.gov/trade/nafta) on exported and imported products.
Trump [reversed course in 2018](https://www.stash.com/learn/trumps-tariffs-on-aluminum-and-steel-whats-the-big-deal), arguing such agreements have flooded the U.S. with cheaper foreign-made goods, which make it difficult for U.S. manufacturers to compete. Trump has said that products from China–in particular [steel](https://www.marketwatch.com/story/tariffs-on-steel-aluminum-are-long-overdue-2018-03-02)–have cost the U.S. millions of jobs, and have caused thousands of factories to close. Economists reportedly [dispute](https://www.washingtonpost.com/business/economy/trump-moves-to-crack-down-on-china-trade-with-50-billion-in-tariffs-on-imported-products/2018/03/22/c09309e8-2de3-11e8-8ad6-fbc50284fce8_story.html?utm_term=.81a89d9a1224) these figures.
But it’s not just China. In fact, since last year the U.S. has imposed tariffs on a wide variety of overseas items, from countries as diverse as South Korea and Mexico, even Germany and France. And in response, [numerous countries](https://www.reuters.com/article/us-usa-trade-tariffs-factbox/factbox-tariff-wars-duties-imposed-by-trump-and-us-trading-partners-idUSKCN1SB0SA), including China, have imposed their own tariffs on U.S. exports.
## Impact on the economy
- The trade war appears to be having a negative impact on U.S. farmers, according to [reports](https://www.bloomberg.com/news/articles/2019-04-29/farmer-income-drops-most-since-2016-amid-trump-trade-war-pain) that suggest the nation’s growers lost about \$12 billion in the first quarter of 2019. Sales of [soybeans](https://www.bloomberg.com/opinion/articles/2019-04-16/trump-s-trade-war-with-china-doesn-t-look-like-a-win) to China were particularly hard hit.
- The U.S. spirits industry, producers of whiskey and other hard alcohol, have experienced declining exports not only to China, but to Europe, Canada, and Mexico, where new U.S. tariffs on products have also caused trade tensions, according to [sources](https://www.nytimes.com/2019/02/12/us/politics/china-tariffs-american-spirits.html).
- U.S. consumers paid an estimated \$12 billion in tariffs since 2018, according to [reports](https://qz.com/1564566/trumps-trade-war-has-cost-the-us-at-least-19-billion/). And they are experiencing higher prices on a wide range of items including [dryers](https://www.nytimes.com/2019/01/25/business/economy/how-tariffs-stained-the-washing-machine-market.html), [lumber](https://www.bloomberg.com/news/articles/2018-03-05/trump-s-tariff-is-forcing-homebuilders-to-cut-costs), [cars](https://www.experian.com/blogs/ask-experian/trade-war-heres-a-list-of-products-that-will-cost-more/), and clothing, shoes, and furniture, [among others](https://www.cnbc.com/2018/09/21/target-deeply-troubled-over-trumps-tariffs-as-retailers-push-back.html).
## How trade wars affect markets
Sometimes the stock market can react to tariff wars.
That’s what happened this week, and also back in March 2018, when the Trump administration announced it would add [new tariffs](https://www.stash.com/learn/trumps-tariffs-on-aluminum-and-steel-whats-the-big-deal) to foreign aluminum and steel. The stock market dropped last year at the prospect that goods and services could begin to cost more for consumers.
Similarly, uneasiness about whether the U.S. and China are coming to any agreements about trade have caused markets to swing throughout 2019. Not only does the U.S. [import billions](https://www.census.gov/foreign-trade/balance/c5700.html) of dollars worth of products from China, U.S. companies [export billions](https://www.census.gov/foreign-trade/balance/c5700.html) of dollars worth of goods to China.
## Remember the Stash Way
Try not to pay too much attention to what happens to the stock market in the short run, as markets tend to be [volatile](https://www.stash.com/learn/the-stash-way-volatility), and move up and down. Trade wars can affect markets, but so can many other things.
That’s why Stash has boiled down its investing philosophy into a three-step strategy we call the [Stash Way](https://www.stash.com/learn/the-stash-way). It involves investing for the long term, regular investing, and diversification. You can learn more about the Stash Way [here](https://www.stash.com/learn/the-stash-way-think-long-term).
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