Tariffs & Trade Wars: Two Concepts Starting With “T” That Should Be Handled With Caution

In the past few weeks, US President Donald Trump has unleashed a flurry of tariffs at a handful of countries, including its allies and China, and sparking a huge media frenzy with both positive and negative opinions.

Some say that Trump has a solid plan and goals with this seemingly chaotic move, while others say his actions are the first step towards a full-scale trade war with the rest of the world.

But what is a trade war anyways? And what do tariffs have to do with them? Why are these two phrases bringing up so much controversy? How will it actually turn out?

Today, we’re addressing these questions, however, with a slightly different approach than average news reports, as we’ll be looking at past trade wars in order to better understand the present.

What Are Trade Wars?

When we hear the word “war”, it usually brings about unpleasant feeling of violence, artillery, and bloodshed.

When we hear the word “trade”, it often is related to something regarding the economy and the exchange of something.

Put these two words together, and you get trade wars (not war trade). It’s commonly defined as the manifestation of countries engaging in a battle of escalating trade barriers against each other. To put it simply, it’s increasing the threshold at which you can trade with the other party.

There are many such “barriers” that are enacted during trade wars, and one of the most notable barriers are known as tariffs. A common misconception is that tariffs are fancy terms for import tax, however, they’re not. Import tax is a broader term that encompasses many smaller terms such as tariffs. Tariffs are particular import taxes on products from particular countries in a particular period. They can be further divided into ad valorem (a percentage of the item’s value, making the tax proportional to the price) and specific taxes (the tax is specific to the product).

In addition to tariffs, there are also tools that are utilized in trade wars, including quotas (limits on exports/imports), embargoes and sanctions (total blockades of trade with a company or country), regulatory barriers (hidden protection that uses environmental, safety, and bureaucratic rules to block imports), currency manipulation (artificially weakening currency to make exports cheaper), etc.

Currently, Trump is utilizing tariffs as an effective tool to implement his new series of protectionist trade policies, including imposing a minimum 10% tariff on all US imports effective starting April 5th 2025, 25% tariffs on most Canadian and Mexican goods, and as of April 15th 2025, risen tariffs on Chinese imports to 145%, escalating an ongoing trade war with China. China has responded with heightened tariffs of its own at 125%.

What Does Trump Want?

With such aggressive actions against both long-term trade partners and so-called “foes”, people have started questioning the motivation behind Trump’s policies.

However, it’s not hard to identify his goals if we look at previous trade wars he’s waged, especially those in his first presidency.

Back in 2018, he started a number of trade wars, most notably against China and European Union steel. The trade war against China lasted until 2020 where things sort of cooled down, and the trade war with the EU ended in 2021 with a truce.

Although there were a lot of factors that influenced Trump’s decisions, they can be summarized into the following goals.

Firstly, America first. Trump is known for his protectionist philosophy, which has shaped a lot of his economic and foreign policies. He has an emphasis on sovereignty, and prioritization of American workers and industries over global cooperation. Another core part of this philosophy is the so-called “fair trade, not free trade” ideology, where Trump demands reciprocal tariffs (equal tariffs of a certain amount) and stop trade deficits (US importing more than it exports).

Secondly, revive US manufacturing. Trump wants to bring back jobs related to American manufacturing. This is because before Trump, the US was heavily outsourcing its manufacturing jobs to places where labour was relatively cheap like Mexico and China. Also, more and more jobs are starting to be replaced by more capable and efficient robots. Trump argues that his aggressive policies could help curb or even reverse this trend. He has taken a few steps to achieve this goal, including tariffs to protect American industries, corporate tax cuts, deregulation, and direct pressure on companies (through his now famous tweets calling out companies by name).

Lastly, political promises. One of his pledges in his campaign to “Make America Great Again (MAGA)” includes his economic promises to bring back manufacturing jobs and to “Make America Build Things Again”. So to keep up with his various pledges, he had chosen to go forward with the 2018 tariffs.

So how did these past trade wars with various countries turn out? Well, not very good actually.

Although his policies did contribute to modest job growth (manufacturing jobs rose by 500,000 during the period from 2016 to 2019), he failed to achieve any long-term impact in any of his goals. In fact, trade deficits actually grew, and with an acceleration in automation, there were fewer job gains than hoped. Also, with the added tariffs, consumer prices grew, leading to higher living costs.

Not only all that, economic relations with many other countries worsened and tensions increased.

Back to 2025

Looking at the present, many of Trump’s motivations overlap with those from 2018, mostly boiling down into five goals: better trade deals, accelerating American industry growth, increased revenue for the government, and lower consumer prices (in the long-term). With tariffs as a tool of leverage, Trump has set a clock for US trade partners to reach an agreement with him in 90 days time. And taking into account that some talks are underway already, it’s possible that Trump will get something out of his efforts.

Conclusion

It’s still too early in the game to know whether Trump’s tariffs will succeed or backfire. However, looking back at past trade wars, there’s probably two ways this trade war could go: either Trump gets what he wants (perhaps partially), or he fails and in the worst case scenario, his plan even backfires.

And that concludes this article on two words starting with “T”.

I hope you learned something new. Thank you for reading, remember to subscribe, like, and share this article. Come back next week for more in-depth news analysis.