Trade wars are economic conflicts between countries that result in the imposition of tariffs, quotas, and other trade barriers. These measures are designed to protect domestic industries from foreign competition. However, every protectionist measure finds its counterpart in other trading countries. In other words, countries begin to restrict imports, increase customs duties and set quotas with their own measures. As a result, the slowdown in global trade may result in political problems and strained relations between countries. Trade wars can be a result of a variety of factors, and they can have significant impacts on the global economy and international trade relations.
Causes of Trade Wars
Trade wars are not always caused by economics. Sometimes countries take this route to protect local producers or to balance the competitiveness of their domestic industries. But often the goal is political or future concerns. Trade wars can be triggered by a variety of factors, including:
1. Protectionism:
When a country takes protective measures to protect its domestic industries, other countries that export to that country are adversely affected. The corollary to this is that other countries retaliate with counter-restrictive measures. It is seen that countries sometimes negotiate by taking into account the warnings of the other side. But it's usually about mutual interests and the balance of power.
2. Political tensions:
Trade disputes can arise due to political tensions between countries, such as disputes over human rights or national security issues. So trade disputes can sometimes be used as a means of pressure for a country to end different actions.
3. Economic disparities:
When there are significant economic disparities between countries, it can lead to tensions and trade disputes as countries try to protect their domestic industries and workers. A country's explanation of protectionist measures with clear justifications and their reasonable implementation may receive a positive response. For example, China made dumping payments to domestic manufacturers for many products, especially in the 2000s. The countries to which these products were exported responded with antidumping duties.
What Is the Reason of Trade Wars
Trade wars can have various reasons, but some common ones include:
1. Protecting domestic industries:
Governments may impose tariffs or other trade barriers to protect their domestic industries from foreign competition. This can be done to support local jobs, prevent foreign companies from dominating the market, or maintain national security.
2. Addressing trade imbalances:
If a country is importing more goods than it is exporting, it may impose tariffs or other measures on imports to reduce the trade deficit. This is often seen as a way to protect domestic industries and jobs.
3. Political tensions:
Trade wars can also be triggered by political tensions between countries. For example, a country may impose tariffs on goods from a trading partner in response to political disputes or disagreements.
4. Intellectual property disputes:
Disputes over intellectual property, such as patents and trademarks, can also lead to trade wars. If a country believes that its intellectual property rights are being infringed upon by another country, it may impose tariffs or other trade barriers in retaliation.
Consequences of Trade Wars
Trade wars can have significant negative consequences for global trade and economic growth, including:
1. Reduced trade:
Trade barriers and tariffs reduce the amount of international trade between countries. Its leading to reduced economic growth and job losses in the affected industries.
2. Higher prices:
As domestic industries are protected from competition they can charge higher prices. In a market where imported products are imported with high customs duties, it is inevitable that prices will increase. Putting a quota on imports causes similar results. Therefore trade barriers may lead to higher prices for consumers.
3. Retaliation:
Trade wars may result in retaliation from other countries. When the US imposed additional tariffs on products to be imported from China in 2018, China responded. For this reason, additional customs duties were imposed on many US origin products exported to China. Retaliation is sometimes applied as engagement. Sometimes retaliation turns into a cycle that causes the trade between the two countries to come to a complete stop.
4. Uncertainty:
Trade wars can create uncertainty in the global economy. Uncertainty sometimes causes exporting companies to stop their investments. States can revise their production and export policies so that uncertainty does not adversely affect the national economy. Therefore, uncertainty can sometimes lead to a permanent decrease or termination of trade between them.
Trade Wars From Eihties Till Now
There have been several trade wars that have taken place in the last 50 years. Some notable examples include:
1. The US-Japan trade war in the 1980s:
This was a period of intense trade tensions between the United States and Japan, centered around the perceived trade imbalance between the two nations. The US imposed tariffs on a range of Japanese goods, while Japan retaliated with tariffs of its own.
2. The EU-US trade war in the early 2000s:
This was a series of trade disputes between the European Union and the United States, largely centered around agricultural subsidies. The EU imposed tariffs on a range of US goods, while the US responded with tariffs of its own.
3. The Canada-US trade war in 2018:
This trade war began when the US imposed tariffs on Canadian steel and aluminum imports, citing national security concerns. Canada responded with tariffs on a range of US goods, leading to a brief period of trade tensions between the two nations.
4. The India-Pakistan trade war in 2019:
This was a brief trade war between India and Pakistan, sparked by tensions over the disputed Kashmir region. Both countries imposed tariffs on a range of goods imported from the other nation.
5. The US-China trade war (2018-2020):
This trade war began in 2018 when the US imposed tariffs on imported Chinese goods, citing concerns about unfair trade practices and intellectual property theft. China responded with tariffs on US goods, leading to a tit-for-tat escalation of trade barriers.
Conclusion
Rrade wars may be seen as a way for countries to protect their domestic industries and workers. However, trade wars have significant negative consequences for the global economy. It is important for countries to find ways to resolve trade disputes through dialogue and cooperation. Its a better solution than resorting to protectionist measures that can harm everyone involved.
COMMENTS