The trade war between the United States and China has escalated tensions and disrupted global supply chains. The conflict is based on economic issues and the clash of two different visions of the world order.
All nations seek to act in their own best interests. That might involve importing goods that are cheaper than what they can produce at home, or exporting products to markets where they can earn more money. Sometimes political considerations drive decisions that have unintended consequences, such as imposing tariffs or restricting imports to gain influence in international forums.
During the presidential campaign, Donald Trump disdained current trade agreements and promised to bring manufacturing jobs back to America. After he took office, he imposed new tariffs that many economists believe will raise prices on American consumers and harm the economy overall.
When a nation imposes a tariff, it forces other countries to increase their own rates or face retaliation, which can lead to a spiral of higher and higher tariffs as nations fight over who will gain the most power in the global marketplace. This can have severe consequences, especially during recessions and periods of civil unrest, when countries are more likely to protect their internal interests from outside competition.
Attempting to avoid trade war, some nations rely on international bodies like the World Trade Organization (WTO) to resolve disputes and reduce barriers to trade. However, the WTO process can be slow and cumbersome. In the meantime, some nations may choose to impose sanctions or other forms of coercive trade barriers, such as embargoes or export restrictions, which can have dramatic and unpredictable consequences.