In a trade war, countries attack each other’s economies with tariffs and other barriers to trade. These battles disrupt supply chains and reshape global trade patterns. They may also lead to higher prices for consumers and political backlash. In extreme cases, they can trigger a military response. For example, the Smoot-Hawley Tariff Act raised import duties to protect American industries but exacerbated the Great Depression and contributed to rising anti-American sentiments that led to World War II.
Our new C-Suite Perspectives podcast explores the many ways countries wield trade wars and why it is important to understand them if you are in leadership positions in your organization. Join Conference Board President & CEO Steve Odland and David Young, president of the Committee for Economic Development, the Public Policy Center at The Conference Board, and Erin McLaughlin, senior economist at The Conference Board Economy, Strategy & Finance Center.
The discussion starts with the Trump administration’s escalating Section 232 tariffs on steel and aluminum. Then it looks at the broader impact of the trade war and why the US-China confrontation matters.
A trade war reduces the dependence of a country on imported goods and prompts investment in domestic production. But it also pushes consumers to pay more for their products and hurts workers in less-developed nations who depend on exports. In the longer run, a trade war can contribute to inflation and restrain global financial market growth, and ultimately reduce economic output.