Tariff War

A tariff war is basically two countries taking turns slapping each other in the economic-face with tariffs. The first country creates a tariff on a second country’s imports, making it more difficult for them to sell their stuff on the first country’s turf. The second country then makes a retaliative import tariff on the first country, doing the same thing back.

This can be dangerous since tariffs can result in supply shocks that suddenly and dramatically affect businesses, prices, and ultimately consumers. Tariffs can be used to try to apply economic pressure to other countries in the hopes that it’ll help pressure them to make certain political moves. But when it’s done with that attitude, oftentimes a tariff war will ensue. Tariffs can have their place affecting the economy in strategic ways when done thoughtfully, but tariff wars are typically more political than they are good for the economy. At the end of the day, a tariff wars are politics gone bad, with consumers footing the bill for more expensive goods from tariffs. Economic wars hurt, too.