askST: Of trade wars and tariffs

Mr Trump's plan to impose tariffs on steel and aluminium will help American steel and aluminium manufacturers, but at the same time raise the costs of doing business for those relying on steel.
Mr Trump's plan to impose tariffs on steel and aluminium will help American steel and aluminium manufacturers, but at the same time raise the costs of doing business for those relying on steel.PHOTO: AGENCE FRANCE-PRESSE

"When we're behind every single country, trade wars aren't so bad." United States President Donald Trump issued this threat when he said he wanted to rebalance poor trading conditions with other nations. He has threatened reciprocal taxes "so that we will charge the same things as they charge us". Many now fear a trade war involving the key trading partners of the US - Canada, China, Mexico and the European Union (EU) - if Mr Trump carries out his promise. Here's a closer look at the issue.

A A trade war is triggered when one country makes it more difficult for another country to sell its goods through trade barriers such as by imposing higher tariffs or quotas and the latter retaliates in a tit-for-tat move.

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A version of this article appeared in the print edition of The Straits Times on March 09, 2018, with the headline 'Of trade wars and tariffs'. Subscribe