INTERNATIONAL

TRADE WARS
Apoorva R Oulkar 2102049 Chaitanya sai 2102068
Rajib Kumar Ram 2102212 Shakil reddy 2102065
Krishna Teja 2102143 M Sai Rajesh 2102173
G Aditya 2102093 M Kartik 2102170
Vamsi Krishna 2102097
Trade wars
• Happens when a country retaliates against another by raising tariffs or restrictions on
Imports
• Can commence when:
• One country perceives that another has unfair trading practices
• Domestic trade unions or industry lobbyists push for protectionism
• Misunderstanding of the widespread benefits of free trade
Pros
• Protect domestic companies from unfair competition
• Increase demand for domestic goods
• Promote local job growth
• Improve trade deficits
• Punish nations with unethical trade policies

Cons
• Increase costs and induces inflation
• Cause marketplace shortages, reduce choice
• Discourage trade
• Slow economic growth
• Hurt diplomatic relations, cultural exchange
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History of Trade wars
19th Century: British Empire Vs China
• British had been sending India-produced opium into China
• Chinese emperor decreed it to be illegal
• Attempts to settle the conflict failed leading to Naval war
• China conceded additional entry of foreign trade (Century of Humiliation)

1930: US Smoot-Hawley Tariff Act

• Raised tariffs (40% ) to protect American farmers
• Nations retaliated, and global trade declined worldwide
• Major factor behind the Great Depression and eventually Nazism
• FDR passed Reciprocal Trade Agreements Act in 1934 (New Deal Recovery)

2018: US Vs PRC, EU, Canada, Mexico

• President Trump imposed a series of tariffs on steel, aluminum to solar panels and
washing machines.
• Canada retaliated through duties on steel and other products from US
• PRC and EU imposed tariffs on agricultural imports from US
• U.S. importers of goods have primarily shouldered the cost of the tariffs
• Trade deal signed with PRC in 2020

2022: NATO+ Vs Russia

• Multiple sanctions on Govt Officials, Businessmen and State enterprises
• Latest- Cap on Russian Crude oil price to 60$
• Russia's earnings from energy exports to increase by 38% YoY
US-China Trade War: Timeline

• Republican Aug. 17, 2017 -The • US-China on-going • Rounds of Tariffs and
Candidate Donald USTR launches trade talks. Failed restrictions followed
Trump hard line on Section 301 Trade Act • Yuan fell at a record
• The case of
trade deficit. of 1974 investigation low (Currency War)
ZTE( illegally shipping
of China for unfair
U.S. technology to • Industrial centers
practices
• “America First” Iran) affected and Jobs cut
• Wins election on • Huawei’s smartphone • Halted as deal signed
Platform to bring launch in the U.S. prior to Pandemic
back US failed as concerns
Manufacturing regarding espionage

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US-China Trade War: Deep dive
US-China Trade War: Impact
• Chinese coastal provinces and cities feel the hardest of US tariffs.

• Guangdong, Shanghai, Zhejiang, Jiangsu receive the most economic

and employment stress.

• The exports of these account over 30% of Chinas’ GDP and faced
Increased cost of components

• Exports of electronic machinery (major US tariff target) account over

60% of total exports of:
-Guangdong: 67.8 %
-Jiangsu: 65.8%
-Shanghai: 60%

Other tactics employed by US:

• Action against specific companies
• Restriction of tourism
• Currency devaluation
• International No-Cooperation
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NATO Vs Russia: Timeline

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NATO-Russia Trade War: Impact

• Significant shrinkage of GDP

• Fall in net imports and exports
• Loss in investor sentiment
• Areas such as food, agriculture, health
and pharma excluded 

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NATO-Russia Trade War: Hedging
• Banned exports of 200+ goods: Telecoms, Medical, Vehicle, Agricultural, Electrical Equipment
and Timber products
• Blocking interest payments to foreign holders of government bonds
• Banning Russian firms from paying overseas shareholders
• Budget surplus of $96 Bn ($28Bn last year) in fist half of 2022 owing to high fuel prices
• Sending Goods, Oil and Gas via friendly countries to avoid and evade sanctions
• Importing Semiconductor parts from PRC

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Firm level Strategies

1. Raise prices while communicating with your customers

• SKU Shrinkage
• Marketing
• Diversified offering

2. Get creative with financing

• Banks
• Leasing companies
• Financial service providers

3. Cut overhead
• Operational 
• General and Administrative
• Austerity

4. Explore New markets

• Re-invest Business development elsewhere
• Long term growth
• Diversify

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Summary
• Trade wars have different impacts on the players indulging,
multilateral conflicts tend to be more effective.
• On a Meta level, Trade wars can be seen as a transitionary
phase where global trade is reduced when bug players like US
put restrictions.
• However, the forces of Globalization prevail and free trade
resumes after the cessation of economic hostilities.

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