Dec 13, 2018

Myth 1: Trade Wars Are Good and Easy to Win

12 Days of Christmas Trade Myths
Christine McDaniel Senior Research Fellow , Veronique de Rugy Senior Research Fellow

This is the first in a holiday-themed series aimed at correcting common misconceptions about trade. Each day until Christmas, economists Christine McDaniel and Veronique de Rugy will address a new claim about trade or tariffs while providing additional resources for those interested in learning more about the topic.

Myth: Trade Wars Are Good and Easy to Win

Actually, they are more like waking up on Christmas morning only to find out that the Grinch ate all your cookies and left you a lump of coal. Unfortunately, this is how trade wars are fought: two countries compete to see which can tax its citizens most heavily with import tariffs. In the US, that means higher prices for American consumers and manufacturers. When the manufacturing sector faces higher prices for raw materials, millions of jobs in that sector are jeopardized. It also means higher prices at the checkout aisle. In other words, it's a big and pricey lump of coal. These two little elves don’t see that as a good thing.

Suggested Resources

  1. A Quick Review of 250 Years of Economic Theory about Tariffs, by Linda Yueh, Harvard Business Review
  2. Trade Talks Episode 43: Costing Trump’s China Tariffs

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