Trade war
Also called: Tariff war · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
A trade war is an escalating cycle in which countries hit each other with retaliatory tariffs and other trade restrictions. Each side raises barriers in response to the other, so trade shrinks and both sides usually lose. Consumers pay higher prices, exporters lose markets, and supply chains get disrupted.
Example
The US–China trade war began with US s.301 tariffs in 2018. It escalated sharply in 2025, with triple-digit tariff rates in April, before truces brought the rates down. A historical warning is the US Smoot-Hawley Tariff Act (1930): the retaliation it provoked helped shrink world trade by about two-thirds between 1929 and 1934.
Don't confuse with
- Retaliatory tariff: this is a single counter-measure. A trade war is the repeated, escalating back-and-forth of such measures.
Related concepts
- Weaponisation of trade
- Economic coercion
- Economic sanctions
- Secondary sanctions
- Export controls
- Dual-use goods
- Technology denial
- Security exception
- Retaliatory tariff
- Reciprocal tariff