{"id":15083,"date":"2025-02-04T16:10:38","date_gmt":"2025-02-04T16:10:38","guid":{"rendered":"http:\/\/torontotribune.ca\/index.php\/2025\/02\/04\/what-is-a-trade-war-a-breakdown-of-tariffs-and-retaliation-national\/"},"modified":"2025-02-04T16:10:38","modified_gmt":"2025-02-04T16:10:38","slug":"what-is-a-trade-war-a-breakdown-of-tariffs-and-retaliation-national","status":"publish","type":"post","link":"https:\/\/torontotribune.ca\/index.php\/2025\/02\/04\/what-is-a-trade-war-a-breakdown-of-tariffs-and-retaliation-national\/","title":{"rendered":"What is a trade war? A breakdown of tariffs and retaliation – National"},"content":{"rendered":"


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As trade tensions rise <\/a>between China and the United States, Canada is not out of the woods yet, leaving some to wonder if a trade war is inevitable.<\/p>\n

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On Monday, the U.S. and Canada agreed to pause tariffs for 30 days<\/a> to negotiate new security measures at the border, but the economic standoff between China and the U.S. continues.<\/p>\n

While the temporary reprieve brings a moment of relief for Canadians, uncertainty still lingers, leaving many Canadians questioning whether a trade war is merely delayed.<\/p>\n

\u201cPresident Trump\u2019s crushing 25 per cent tariffs are a complete betrayal of the historic bond between our countries. It is a declaration of economic war against a trusted ally and friend,\u201d British Columbia Premier David Eby said Saturday in response to Trump\u2019s tariff threat.<\/p>\n

While trade disputes are nothing new, tit-for-tat exchanges of tariffs and trade restrictions can quickly escalate, creating a complex economic battle with significant ramifications, explained Robert Howse, a professor of international law at New York University.<\/p>\n

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When the U.S. announced tariffs on Canada on Saturday and Canada hit back with its own plan<\/a>, it was clear the two countries were \u201cundoubtedly\u201d in a trade war, Howse said.<\/p>\n

Here\u2019s what to know about trade wars.<\/p>\n

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A trade war is an economic conflict that erupts when countries engage in a cycle of retaliatory trade measures, like tariffs, leading to escalating restrictions that disrupt markets, raise prices and strain international relations, Howse said.<\/p>\n

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\u201cBy imposing retaliatory measures, that\u2019s really what makes it a war,\u201d he said. \u201cThat means Trump puts on tariffs and other countries like Canada react by imposing tariffs on the United States, or another form of punitive trade measure.\u201d<\/p>\n

Generally, he said, it is a form of protectionism.<\/p>\n

\u201cBut it\u2019s a question of whether retaliation is a logical strategy to protect one\u2019s economy,\u201d Howse said.<\/p>\n

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\u201cThe problem with a trade war, the country that put on the original protectionist measures can respond to retaliation by retaliating against the retaliation. And that creates an even worse situation.\u201d<\/p>\n

Kevin Hassett, director of the White House National Economic Council, said Monday that it was misleading to characterize the showdown as a\u00a0trade\u00a0war\u00a0despite the planned retaliations and risk of escalation.<\/p>\n

\u201cRead the executive order where President Trump was absolutely, 100% clear that this is not a\u00a0trade\u00a0war,\u201d Hassett said in an Associated Press report. \u201cThis is a drug war.\u201d<\/p>\n

However, the executive orders also included wording that specified the tariffs could increase if Canada retaliated in response.<\/p>\n

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\n\t\t\t\tDifference between a trade ‘dispute’ and ‘war’\t\t\t<\/h2>\n<\/p><\/div>\n

Trade disputes happen frequently, and are usually temporary disagreements between countries over trade policies, usually involving smaller tariffs or disputes that can be resolved relatively quickly.<\/p>\n

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\u201cYou can have these disputes that have a tit-for-tat character, but are just inherently limited to a particular product,\u201d Howse said.<\/p>\n

For example, he pointed to the trade dispute between China and the U.S. on solar panels<\/a>.<\/p>\n

The U.S. and China are currently engaged in a trade dispute concerning solar panels. The U.S. initially imposed tariffs on Chinese solar panels and cells, citing unfair trade practices and concerns about China\u2019s market dominance. China retaliated with tariffs on U.S. goods.<\/p>\n

In contrast, Howse said a trade war is a more intense conflict where countries impose escalating tariffs and trade barriers on each other in retaliation, often leading to significant economic disruptions.<\/p>\n

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