A trade war refers to two or more states raising or creating tariffs or other trade barriers on each other in retaliation for other trade barriers. Increased protection causes both nations' output compositions to move towards their autarky position.
Some economists would agree that certain economic protections are more costly than others, because they may be more likely to trigger a trade war. For example, if a country were to raise tariffs, then a second country in retaliation may similarly raise tariffs. But an increase in, for example, subsidies, may be difficult to retaliate against by a foreign country. Many poor countries do not have the ability to raise subsidies. In addition, poor countries are more vulnerable than rich countries in trade wars; in raising protections against dumping of cheap products, a government risks making the product too expensive for its people to afford.
Famous quotes containing the words trade and/or war:
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Looking out over the whole darn countryside, a beacon of satisfaction
I am. I’ll not trade places with a king. Here I am then, continuing but ever beginning
My perennial voyage....”
—John Ashbery (b. 1927)
“The war against Vietnam is only the ghastliest manifestation of what I’d call imperial provincialism, which afflicts America’s whole culture—aware only of its own history, insensible to everything which isn’t part of the local atmosphere.”
—Stephen Vizinczey (b. 1933)