Question
International trade wars did not start when the Trump administration announced a 25% tariff on $50 billion dollars worth of Chinese goods (including fake teeth,
International trade wars did not start when the Trump administration announced a 25% tariff on $50 billion dollars worth of Chinese goods (including fake teeth, cassette tapes and bovine serum).
In the late 19th century, Russia and Germany engaged in their own trade war. At this time, the golden rule for international trade (most-favored-nation-principle) was that if a country was to apply tariffs on a product, that tariff applied to all countries (and vice-versa when lowering a tariff). To "win" the upper hand on Russian cattle farmers, Germany imposed a tariff on imported cattle. But "strangely", it created a special exclusion for large dappled cattle reared at least 300 mts above sea level and which have at least a month's grazing at a spot at least 800 mts above sea level. Why? This way Germany was able to exclude cows from Switzerland from the tariff and aim it specifically on Russian cows, while still honoring the most-favored-nation principle.
Fast forward to the Cold War in the 1960s. The local production cost of chickens fell to the point that it became a staple in the U.S. U.S. started exporting frozen chicken to Europe (where it was still a luxury good), causing European chicken farmers to lose as a result of the prices falling. So how did European countries respond? Steep tariffs on U.S. chicken. And how did the U.S. respond? Tariffs of 25% on light trucks (originally intended to target Volkswagen vans and still existent today), potato starch, dextrin and brandy.
Despite the distortions tariffs and quotas can introduce to the economy, they have become a common international trade strategy. Should the governments continue using them as their first policy option for trade? What are examples of bizarre products that got caught up in the middle of a trade war?
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