Trade War
Candlefocus EditorTrade wars are a result of attempts to shield domestic businesses from foreign competition by making their products or services more expensive to the public. Higher taxes on foreign companies mean that their products become more expensive to domestic consumers, potentially leading to the local companies growing in market share. As a result, trade wars are usually a controversial issue, with both advocates and critics presenting strong views.
Proponents of trade wars often argue that they are necessary for a nation to maintain power in international markets, as well as protect domestic businesses from foreign competition. They may also argue that in certain cases, there is a compelling advantage to a country in protecting its own interests. For instance, proponents of trade wars may point to the tariffs imposed on China by the US in 2018 to protect American manufacturers of products such as solar panels and washing machines, which were being sold in the US at prices much lower than similar domestically produced products.
Opponents of trade wars, meanwhile, argue that these types of restrictions ultimately harm local businesses and consumers, and that the damage done to an economy through a trade war will always outweigh any potential benefits. It is well known, for instance, that the tariffs imposed on China by the US in 2018 resulted in retaliatory taxes from Beijing, making it more difficult for American companies to export to the Chinese market. This eventually resulted in a decrease in exports and a fall in economic activity in conflict areas, with losses of up to $59 billion to the US economy.
Overall, trade wars are a controversial issue, with strong arguments on both sides. While it is clear that protectionist policies can help protect certain domestic markets, it is important to consider the potential long-term economic damage that might result from a trade war before taking such action.