Definition
A Customs war, also known as a toll war or tariff war, is a type of economical conflict between two or more states. In order to pressure one of the states, the other raises taxes or tariffs for some of the products of that state. As a reprisal, the latter state may also increase the tariffs.
Tariff War
What is a ‘Tariff War’
An economic battle between two countries in which Country A raises tax rates on Country B’s exports, and Country B then raises taxes on Country A’s exports in retaliation. The increased tax rate is designed to hurt the other country economically, since tariffs discourage people from buying products from outside sources by raising the total cost on those products
Explaining ‘Tariff War’
One reason why a country might incite a tariff war is because it is unhappy with one of its trading partners’ political decisions. It hopes that by putting enough economic pressure on the country, it can force a change in the opposing government’s behavior. This type of tariff war is also known as a “customs war”.
Further Reading
- Economic impacts of the possible China–US trade war – www.tandfonline.com [PDF]
- A differential game model of tariff war – www.sciencedirect.com [PDF]
- A tariff-growth paradox? Protection's impact the world around 1875-1997 – www.nber.org [PDF]
- Tariffs and aggregate economic activity: Lessons from the Great Depression – www.sciencedirect.com [PDF]
- Watersheds and turning points: Conjectures on the long-term impact of Civil War financing – www.jstor.org [PDF]
- Why did the tariff–growth correlation change after 1950? – link.springer.com [PDF]
- Always protectionist? Latin American tariffs from independence to Great Depression – www.jstor.org [PDF]
