Trade wars, explained

Trade wars, explained

What do you think of when you hear the word
“war?” Is it this? Or maybe this? Well, there’s a different type of war you
may have heard a lot about recently. Trade war worries igniting. Is the trade war back on? Trade war. Trade war. Full-blown trade war. The “weapons” in a trade war are everywhere. It’s the food you eat. The train you ride to work. And the laptop you’re probably watching
this video on. As a consumer you’re probably consuming imports. If we have a trade war and we start slapping
tariffs on all of those imports, the bill is going to be higher. If the world relies so much on trade, what
is a trade war and why do countries get caught up in them in the first place? Alright, global trade can be a dry topic so
let’s jazz this up a little bit. To avoid any spoilers, let’s say it’s
season one of Game of Thrones and both the Tyrell and the Lannister kingdoms manufacture…
googly eyes. The Tyrells then start to subsidize googly
eye manufacturing in their kingdom. That basically means that the Tyrells are paying
at least part of the cost of manufacturing, reducing the cost for buyers. The Lannisters are understandably upset — why
would anyone want to buy their more expensive product? They could try and negotiate with the Tyrells
or they could choose to impose tariffs: taxes on imports that raise the cost of those goods. Which in this case, would punish the Tyrells. With the tariffs in place, if the Tyrells
tried to export goods to the Lannisters, they’d have to pay an extra tax. The Tyrells could then impose tariffs of their
own. Now if this disagreement goes back and forth
and escalates with even more tariffs, that would be considered a trade war. But trade wars aren’t fiction and there’s
more than one way they can start. One possibility is you want to keep out
countries import so that your domestic competitors have an edge. The second possibility is if there’s a country
that is doing something that you don’t want them to, you can use a tariff as a way of inflicting
a degree of pain, of economic pain on that country. And you say until you change your evil ways
I’m going to make it hurt. Okay, so who “wins” a trade war? One way to think about who “wins” a trade
war is looking at which country has more targets to choose from. The more goods you ship to another country,
the more vulnerable your goods are to punishing tariffs. So some economists would say that the country
which ships fewer goods to the other has an advantage — and can outlast the other in
a big clash. Trade wars can also boost the fortunes of
countries that stand outside the fray. In the 1930s, the US enacted the Smoot-Hawley
Tariff Act which put into place steep, sweeping tariffs on imports as a way to protect American
workers and industries. Canada and some European countries put up
tariffs of their own, launching a trade war. Some of these countries then abandoned the
US as a trading ally and took their trading elsewhere. Soviet Russia, a country not involved in the trade
war, ended up gaining trading partners as a result of Smoot-Hawley. So sometimes countries not involved in a trade war can benefit from one. But, as is the case with most wars, trade wars are harmful for almost everyone involved — particularly for poorer consumers. Rising prices in a trade war can have ripple effects. When people have to spend more money on basics like clothing, it means they have less money to spend on other goods and services. And that can dampen the pace of the economy. Traditionally when you’ve looked at trade protection,
you often put higher protection on goods that are consumed by poor people. There are economists who have documented that
systematically you tend to find higher tariffs on things like low-end clothing, shoes, sugar,
which play a disproportionate role in the spending of people who are less
was well off. In April, President Trump unveiled a list
of over 1000 Chinese exports — things like aircraft parts, TVs, and medical devices — that
he planned to place tariffs on, as a way to to punish Beijing for restricting US investment
in China and for stealing American intellectual property. The very next day, China struck back, unveiling
its own list of US exports that it planned to place tariffs on. Since then, Trump has threatened another round
of tariffs, with China ready to respond with its own additional tariffs. The whole situation is starting to look a
lot like a trade war. Countries disagree on fair and unfair trade
practices all the time. But there’s something unique about Trump’s
approach to it: the unpredictability, the wild threats, the disinterest in even pretending
to play by the rules. Trump isn’t just destabilizing trade relations
with China or any other country he threatens — he’s destabilizing the entire global system
of trade.

84 thoughts on “Trade wars, explained

  1. Vox foreign affairs staff writer, Zeeshan Aleem (who appears in this video!) wrote about the widening gulf between the US and some of its largest trading partners. Read more:

  2. Who gets hurt by trade wars–consumers.
    Who gets hurt by an increase of minimum wage–consumers.
    Who gets hurt by subsidies–consumers.
    Who gets hurt by business restriction–consumers.
    Who gets hurt by government interference–consumers.
    Who gets hurt by government noninterference–everyone.

  3. I think its good if its controlled, like anything. You need a balance. Trump wants a 1800 – 1950's America. More product made within the country, however a product which lasts – making up for the expensive cost of the product. So in order to complete this, you need Tariffs

  4. We tried to tell you that trump was a moron. But, Nooooo…. you had to go and make him president.
    Tired of winning yet? Are we great again, now? ::facepalm::

  5. Waaa waaa waaa .. China choose to, for 20 years, lie, cheat, and steal from USA. Americans saw this were sick of it by 2005 but bush and Obama did nothing! This was all avoidable back in 2000 when we stupidly trusted China to enter the wto…its almost too late but thank god we finally have a president who will deal with this outlaw country – China

  6. would have been a little nicer if GOT kingdoms or whatever reference were not used since all of us are not GOT viewers.

  7. Didn’t explain anything. The game of thrones analogy was absolutely useless and unnecessary.

  8. @VOX , 2:59 you could never trade just with “soviet russia”,
    because it used to be part of dictatorship “union” called Soviet union, or USSR.

  9. Wow, you’re not biased, are you 🙄🙄. Here I was hoping that your mission was pure education. Totally wrong. Maybe you can put up a map showing what the tariffs China has for the US are like? Like how because the tariffs there on US goods are so high, we literally can’t sell anything there which has been US manufacturing workers jobless since the 80s. Nooo, it’s all Trump is hurting poor people. I guess I should have assumed that sort of bias. I’m just disappointed

  10. Interesting how no one cared about this until Trump said something. I bet if Obama had said something, you would have been bowing down & licking his a$$

  11. Get more information at

  12. "With the tariffs in place, if the Tyrells try to export goods to the Lannisters, _they_'d have to pay an extra tax."
    Who is "they"? Trump seems to think it's the exporting company. But I thought – and the added dollar sign at 1:33 suggests the same – that whoever buys the goods in the importing country pays an additional sum – the tariff?

  13. I appreciate the content but I hate how you used game of thrones as a reference. I never watched it and i couldn't relate. The world doesn't revolve around you.

  14. Vox failed to mention a 3rd reason of imposing tariffs: It increase government tax revenue. A larger revenue allows governments to pursue more policies or further current policies. The Trade-War becomes less of a war when both sides of the Government benefit from higher revenue on traded goods.

  15. The USA was the major driver in setting up international trade rules at the 1944 Breton Woods Conference. GATT and later WTO control how trade disputes are to be addressed. Now Trump simply ignores those rules and imposes tariffs without regard for the implications for the world including the USA. Trump might save US steel workers jobs while he sends soy farmers broke, disrupts if not destroys complex supply chains and drives thousands of American workers into unemployment.

  16. USA current trade war moves are only hurting themselves, consumers in all allied European countries, big companies in allied countries like Japan, France , Britain etc meanwhile causing no harm whatsoever to China.
    It can accurately be described as fart against the wind.

  17. Wish you didn't use Game of Thrones reference "Most adults don't watch that show". Could have just explined it realistically and factually like you have with other news. Like who started it first, when did it began, little history on how chinese governemnt lied to american companies for uneven trade and promisses which were never made, you know unbiased and truthful info. Yes trump is still an idiot but state facts and less bias opinions.

  18. if money is made god of everything how will the religions define their existence if they aren't the government ….this trade war will lead to a conflict war where lots of people will murder and die and money gets to play devil's advocate

  19. It doesn't has to be complicated. If china can't function as a low end manual assembly plant, just move your factories to Vietnam or India. End of the story.

  20. The fact is Huawei Mr. Ren is a soldier, a hero, however trump is a loser, deserter with 5689 egg-size chick eyes corn helosis

  21. THis is trade 101, it is not trade of what we have today. How do you explain, when we have companies thats across the globe? For them its borderless, when you import from China using your labtop example, you are actually buying a computer assemble in china, with parts from Samsung (51% own American) and using expensive US components running US software, paying US advertisment. When goods is profitable its stock goes up, the stock is than sold to big bank that include Japan/China/American/EU. If you use trade 101, it will hurt Chinese more, if you use Trade 501, the picture is clearly hurting US more.

  22. Interesting how trump can start a trade war, wait for stocks to go down, invest in those stocks, cancel the trade war. Or he can fake out a huge trade war so stocks plunge, he then buys those and says that no war will happen. Both of those options will make him alot of money off of americans.

  23. Why American tariffs are bad and European and Chinese ( in place since 1976 ) are ….good.
    Trump is right. No tariffs ….
    Europe and China have tariffs for ALL AMERICAN PRODUCTS . Japan too.
    Go Trump ! America is not a cookies jar anymore !

  24. Unfortunately this trade war between China and the US only gonna hurt the US consumers and the US workers.

  25. eh, but little is talked about why there is a trade war. orange man making things cost more, nobody talks about intellectual property theft and what that costs. manipulation of currency and what that costs.. you guys are propagandists.

  26. China's intellectual property theft was just mentioned once in passing. No emphasis on it what so ever. Yeah stealing billions of dollars from US companies is nothing. What matter is that Trump's ways are bad. LMAO. Yeah. If we don't buy from China, Vietnam Indonesia India Pakistan and other countries with cheap labour cost can not produce what China does. Get real!

  27. Trade war. Trade war
    Trade war. Trade war
    Trade war. Trade war
    Trade war. Trade war
    Trade war. Trade war
    Trade war. Trade war
    Trade war Trade war
    Trade war Trade war
    Trade war Trade war
    Trade war Trade ❤️

  28. The reason Trump is doing this is because China has been extremely unfair on trade with US in the past. They ignored the rules setted in WTO and putted high and uneven terrefs on goods like cars to encourage Chinese car manufacturers and allowed theme to steel technologies from American companies. They restricted their internet, so reliable companies like Google and Facebook are pushed out of the Chinese market and replaced by worse local counterparts. China started this uneven marketing first, so it's only natural for United States to retaliate.

  29. It's like people think our relations with China are good, even though we are 23 trillion dollars in debt to them. Terrifs are to offset that and start relieng on our own industries.

  30. Cbr chenic biologL radiogize warfEr.

    Inport. Export

    Trade deAls overall price both export inport $$$$






  31. Dear Vox Media,
    Why is there always a low-key punch towards Trump?
    The dude who just was watched 3 videos from your channel.

  32. What’s the difference with a consumption tax. We consume to much and need to produce more why not tax income less and tax consumption more.

Leave a Reply

Your email address will not be published. Required fields are marked *