While all nations seek to promote their own interests, some policies escalate into trade wars that disrupt global supply chains and can have far-reaching consequences. While short-term political goals may be served, in the long run such measures are detrimental to economic growth and stability. Even if favorable agreements eventually emerge, the overall pie shrinks for consumers and businesses, leading to stagnation and conflict. The lesson from history is that global trade is more productive when nations cooperate and reduce barriers to trade rather than promoting trade barriers for their own political or economic benefit.
While the Trump administration’s current trade policy is deeply unpopular in public polling, its advisers believe they can use it to entice world leaders to negotiate with them for concessions. So far, however, they haven’t succeeded. In fact, foreign leaders have benefited from using Trump as a foil in their domestic politics, and some, including British Prime Minister Keir Starmer and French President Emmanuel Macron, have seen their popularity increase by standing up to the US president’s coercive threat.
As a result of the ongoing trade war, tariffs have already been imposed on more than $264 billion worth of imported goods. As a result, the cost of imported components that are used in products manufactured in the United States is expected to rise. This will likely increase the costs of assembling cars in the US, which will in turn make them more expensive for American consumers. In addition, US exports are likely to decline, resulting in lower tax revenues for the federal government.