Trade War
A conflict in which countries impose escalating tariffs or trade barriers on each other.
What is Trade War?
A trade war occurs when two or more countries retaliate against each other's trade restrictions — typically tariffs, quotas, or subsidies — in an escalating cycle. Trade wars are usually triggered by one country imposing tariffs to protect domestic industries, prompting the target country to respond with its own tariffs. The resulting tit-for-tat escalation raises prices for consumers, disrupts supply chains, reduces total trade, and can slow economic growth on both sides. While governments may pursue trade wars to protect jobs or extract concessions, most economists argue the aggregate economic costs outweigh any gains.
Example
The US–China trade war (2018–2020) saw both countries impose tariffs on hundreds of billions of dollars' worth of each other's goods. US importers paid billions in additional costs that were largely passed to consumers and businesses, while Chinese manufacturers lost US market share.
Source: Peterson Institute for International Economics — US–China Trade War