Winners and Losers in Trade Wars
Trade wars rarely have clear-cut winners, and their impacts are often complex and far-reaching. However, we can identify several groups that may benefit or suffer:
Potential Winners:
1. Domestic industries protected by tariffs: These industries may see reduced foreign competition and increased market share. But this, in the context of a globalized international economy is a huge "may."
2. Government coffers: Tariffs can generate significant revenue for governments. For example, the U.S. trade war policies currently in place add up to $79 billion in tariffs.
3. Third-party countries: Nations not directly involved in the trade war may benefit as trade is redirected. For instance, Vietnam, Taiwan, and Mexico saw increased U.S. orders during the U.S.-China trade war. Something that may happen again with bigger wins for these countries given the scope of tariffs that Trump is threatening to levy.
Potential Losers:
1. Consumers: Tariffs often lead to higher prices for imported goods, reducing purchasing power. The Congressional Budget Office estimates that tariff-related costs have reduced household income by an average of $580 since 2018. This could get way higher if President Trump fulfills his campaign promise to level extraordinarily high tariffs on China, Canada, Mexico - all huge trading partners - and other European nations.
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