Economic security

Trade Wars and How They Affect You

A trade war is when a nation imposes tariffs on imports and foreign countries retaliate with similar forms of trade protectionism. As it escalates, a trade war reduces international trade.

A trade war starts when a nation attempts to protect a domestic industry and create jobs. In the short run, it may work. But in the long run, a trade war will cost jobs and economic growth for all countries involved.

Trump's Trade War

On March 8, 2018, President Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. America is the world's largest steel importer. Trump believes the tariffs would protect the 147,000 workers in the U.S. steel and aluminum industries. But they could hurt the 6.5 million workers in industries that need steel. It will also raise costs for steel users, like automakers. They'll pass those costs onto consumers.

The tariff is in effect against China, Russia, and Japan. Trump said Canada and Mexico would be exempt until the NAFTA renegotiations were finalized. Canada is the largest source of U.S. steel imports. Mexico is the fourth largest. Argentina, Australia, and Brazil were also exempted.