The Tariff Wars: What's the Endgame and Who Really Wins?
Author: William Moulod
In an increasingly globalized economy, the resurgence of tariff-based strategies has raised important questions. With former President Donald Trump once again floating 25% tariff on imported cars, it begs a deeper dive into the motivations, implications, and potential endgame of these policies. Are they just political tools, or can they actually lead to long-term economic benefits for consumers?
The Strategic Game Behind Tariffs
Tariffs, in theory, are taxes placed on imported goods to protect domestic industries or correct perceived trade imbalances. But in practice, especially in the Trump era, they serve a more strategic purpose: leverage.
Rather than being about revenue generation, Trump's tariffs are a negotiating tactic. The idea is simple: hit competitors hard, force them to the table, and negotiate better trade terms. It's economic brinkmanship — high-stakes poker where the chips are consumer prices, global supply chains, and international relationships.
The Goal: Reciprocity or Retaliation?
Trump has long argued that the U.S. is taken advantage of in global trade, pointing to low foreign tariffs on American goods versus high U.S. tariffs on theirs. The 25% tariff on imported cars is a move to counter what he sees as unfair treatment — particularly from the EU and China.
In this framing, the "endgame" is reciprocal trade — a level playing field where U.S. exporters get the same deal abroad as foreign companies get in America.
But here's the catch: Will other nations respond by lowering their tariffs — or raising them in retaliation?
A Consumer-Centric Lens: What's at Stake?
From a consumer perspective, lower global tariffs are unequivocally good:
Lower prices: Consumers benefit from cheaper imported goods.
More variety: Open markets lead to more choices.
Reduced inflation pressure: Tariffs act like a tax, inflating prices. Remove them, and inflation drops.
If the U.S. successfully pressures other nations to drop their tariffs, consumers win big. But if it turns into a tit-for-tat spiral, like what we saw in 2018-2019, we get the opposite:
Higher costs: Especially on essentials like cars, electronics, and food.
Slower growth: Trade tensions hurt business investment.
Global supply chain disruptions: Companies hesitate to invest when rules are unstable.
Tariff Wars in Historical Context
Tariffs aren’t new. The Smoot-Hawley Tariff Act of 1930 is often cited as a cautionary tale. It raised U.S. tariffs to record levels, triggering retaliatory tariffs and contributing to the Great Depression.
More recently, during Trump’s first term, the U.S. imposed tariffs on steel, aluminum, and a broad range of Chinese goods. The result? China retaliated. U.S. businesses faced rising costs. Some American farmers were devastated by reduced access to Chinese markets. While certain industries gained temporary protection, the broader economy — and the consumer — bore the brunt.
The Best-Case Scenario: Negotiated Free Trade
If tariff threats actually lead to lower global tariffs — a sort of forced liberalization — then Trump’s strategy might be seen as bold but effective. It would mean countries are pressured into dropping protectionist policies, opening their markets more widely.
In that world:
Prices drop
Innovation increases
Economic growth is stronger
It’s a long shot, but it’s the optimistic lens through which Trump’s camp views this strategy.
The Worst-Case Scenario: Protectionist Gridlock
The more likely outcome? Nations dig in. Tariffs rise globally. Domestic producers become less competitive long-term due to reduced pressure to innovate. Consumers pay more. Inflation lingers. Political tensions escalate.
Protectionism feels good short-term, but history shows it backfires long-term.
Where Do We Go From Here?
The future of the tariff wars depends on whether nations take the bait — or call the bluff. If trade partners come to the table and drop their own barriers, consumers could see significant benefits.
But if we enter another round of global economic nationalism, the losers are clear: everyday consumers, global stability, and long-term growth.
Bottom line: Tariffs can be a tool, but not the goal. Smart trade policy should focus on lowering barriers, not raising them. The real win for consumers comes when markets open, not when they close.
