What is a Trade War—and Could Trump Really Win One?

Thanks to dueling tariff threats, China and the U.S. move closer to direct economic confrontation.

trade war
Traders and financial professionals work on the floor of the New York Stock Exchange (NYSE) ahead of the opening bell, April 4, 2018 in New York City. (Drew Angerer/Getty Images)
Getty Images

This week, there has been plenty of news about China and the United States heading towards a full-on trade war. China threatened to impose tariffs on 106 more U.S. products after a similar U.S. move on Tuesday. But what exactly is a trade war? And once you start one, how do you win or get out? In early March, President Trump tweeted that “trade wars are good, and easy to win.” China shot back with a statement saying, “China would fight to the end to defend its own legitimate interests with all necessary measures.”

In theory, the Washington Post explains, the World Trade Organization is tasked with preventing escalating situations like this and mediating disputes when it can’t. It released a statement saying they are monitoring the situation closely. Between 1995 and 2015, more than 500 cases were filed to the WTO and most were resolved through mediation. But President has shown little deference to international organizations or agreement and shows little interest in participating in any kind of brokered settlement. In fact, he seems to be deliberately undermining the legitimacy of that process by saying his tariffs are based on “national security” concerns, The Post reports. That argument could render the WTO’s role meaningless. Trump’s critics, however, argue that the president risks causing long-term damage to the WTO’s standing just to gain a short-lived trade victory over China.

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