Trade Wars: Why Tariffs are Like Schoolyard Fights (But for Countries)

I decided to hold off on this one for about a year. If President Trump’s achieve any good, that is a victory for him, and his White (House) Washed Gang. If it isn’t a victory, if it does tank the economy of the USA, I hope this will help you understand why.

Cliff Potts

November 30, 2024

---

Baybay City, Philippines — Imagine you and your best friend are trading lunches. You love their amazing peanut butter and jelly sandwiches, while they adore your delicious homemade cookies. Trading lets you both enjoy something new and yummy, right? Well, countries do something similar, but instead of lunches, they trade goods and services. This is called international trade, and it’s generally a good thing! But sometimes, countries get into fights (trade wars) and throw up walls (tariffs) to keep other countries’ stuff out. Just like schoolyard fights, trade wars usually hurt everyone involved. Here’s why:

Tariffs: The Trouble with Tollbooths on Trade

Think of a tariff like a tollbooth on the highway between countries. When a country puts a tariff on a good from another country, it’s like making the other country pay extra to sell their stuff here. This makes those goods more expensive for you to buy.

Ouch! Higher Prices for Everyone!

Remember how excited you were to trade your cookies for that yummy PB&J? Now imagine if your friend suddenly started charging you a bunch of extra cookies just to have yours. You wouldn’t be happy, right? That’s exactly what happens with tariffs. The extra cost gets passed on to you, the consumer, so you end up paying more for the things you like.

But Why Do Countries Put Up These Tollbooths Anyway?

There are a few reasons, some better than others:

• Protecting Jobs: Sometimes, countries worry that cheap goods from other countries will put their own companies out of business. So, they put a tariff on the foreign goods, making them more expensive and hopefully keeping people employed in their own country.
• Supporting Local Businesses: Countries might also use tariffs to encourage people to buy things made at home. This can be good for local businesses, but it can also limit your choices.
• Bargaining Chip: Sometimes, countries put on tariffs as a way to pressure another country to lower their own tariffs. It’s like saying, “If you don’t lower yours, we won’t lower ours!” This can sometimes work, but it can also lead to a full-blown trade war.

Why Tariffs Are a Bad Idea

Even though countries might have good intentions when they put up tariffs, they usually end up hurting everyone involved. Here’s why:

• Higher Prices: As we said before, tariffs make things more expensive for consumers. This means you have less money to spend on other things, hurting the overall economy.
• Less Choice: Tariffs limit the variety of goods available. Remember how excited you were to trade for that PB&J? Tariffs can take away those exciting new options.
• Job Losses: Believe it or not, tariffs can actually lead to job losses in the long run. Why? Because when countries put up tariffs, other countries might retaliate with tariffs of their own. This makes it harder and more expensive to sell goods overseas, which can lead to companies laying off workers.

Trade Wars: When Things Get Really Messy

Imagine you and your friend are in a full-blown fight over lunch. You both put up walls of lunchboxes, refusing to trade at all. That’s kind of what happens during a trade war. Countries keep putting up higher and higher tariffs, making it impossible or super expensive to trade. This hurts everyone involved, as we’ve seen.

So Why Do Countries Still Use Tariffs?

Even though they’re bad for everyone, tariffs are still used sometimes because:

• Short-Term Gains: Sometimes, a country might see a short-term benefit from a tariff. For example, a domestic industry might see a boost in sales because their foreign competition is suddenly more expensive.
• Politics: Politicians might use tariffs to appeal to voters who are worried about losing jobs. However, the long-term costs often outweigh the short-term benefits.

The Future of Trade: Will Countries Learn Their Lesson?

The future of trade is uncertain. Some countries are moving towards more open trade, while others are still using tariffs. It’s important for countries to remember the lessons of history and the harm that trade wars can cause. International trade, like trading lunches with your friend, benefits everyone when it’s done fairly. Hopefully, in the future, countries will focus on cooperation and work together to lower trade barriers, making everyone a winner!

Remember: Trade is like a big game of sharing. When everyone plays fair, everyone gets to enjoy the benefits. Tariffs are like bad sportsmanship – they ruin the game for everyone. So, let’s all work towards a future where countries trade freely and everyone has access to the things they want and need!