The Real Cost of a Trade War: Examining the Fallout of US Tariffs

Abstract

The previous trade war was a failure on all accounts for US President Donald Trump: the trade deficit was not cancelled and his policies cost Americans their jobs. A trade war on a larger scale with bordering countries will be as damaging if not more.

Due to the size of the American market, tariffs will undeniably considerably hurt its affected partners.

Retaliatory tariffs, while understandable, will only further the cycle of losses for all actors involved in this trade war.

This trade war threatens CUSMA and further risks the region’s economy.

The tariffs are unlikely to improve the trade deficit or the value of the dollar and will worsen problems like inflation and decreasing competitiveness of US manufacturing.

Reshoring looks compromised and the trade war is unlikely to benefit the average American worker.

A trade war is never without suffering and, whether economically or politically motivated, the analysis suggests the tariffs are likely to be painful for the American people.