Trade wars: Who Wins?

Trade wars are a bit like school lunchroom brawls: someone grabs someone else’s chips, a tray gets launched, someone yells, and before long, mashed potatoes are dripping from the ceiling. The 20th century saw this kind of chaotic economic slap-fighting on a near-regular basis. Countries would hike tariffs to protect their own, only to trigger retaliations, counter-retaliations, and eventually a full-blown food fight of global proportions — minus the gravy, plus some serious GDP shrinkage.

Imagine a group of neighbours arguing about hedge heights, lawnmowers, and barking dogs. One builds a higher fence, another lets their cat roam freely out of spite, the third dumps compost over the fence, and suddenly you’ve got an international incident. Trade wars are that, but with spreadsheets, bureaucrats in grey suits, and a suspicious amount of smugness.

So here are five trade war episodes where governments thought they were playing 4D chess, but mostly ended up spilling hot coffee all over the board. These aren’t cautionary tales — they’re economic sitcoms with very expensive punchlines.

Take the Smoot-Hawley Tariff Act of 1930. The US was already in economic freefall — banks were crumbling, people were queuing for soup, and the Dust Bowl was brewing up its own brand of misery. Instead of, say, stabilising the banking system or helping the unemployed, Congress decided the real enemy was foreign goods. So they hit more than 20,000 imported items with sky-high tariffs — some going up to 60%. The logic? Protect American jobs. The result? Other countries said, “Right, two can play at that game,” and fired back with their own tariffs. US exports collapsed by 61%, and world trade shrank by about two-thirds. Farmers who thought they’d been thrown a lifeline ended up more marooned than ever. The act didn’t just fail — it became synonymous with economic self-sabotage. It’s the legislative equivalent of setting your own car on fire to stop a parking ticket.

Skip ahead to the neon-lit 1980s, where Japan was having a moment. Think Walkmans, VCRs, bullet trains, and microchips. Japanese tech firms were taking over, and the US didn’t like it one bit. Words like “dumping” and “unfair trade” started flying about like frisbees at a barbecue. In 1986, Japan agreed to a deal limiting chip exports and allowing US firms more access. Did this calm anyone down? Nope. The US imposed 100% tariffs on $300 million worth of Japanese electronics. Because nothing says “thank you for the compromise” like economic revenge. Intel probably high-fived itself in a mirror. Japan, however, didn’t sulk. It doubled down on innovation, stayed polite, and in time, turned into an indispensable chip supplier. In today’s tech landscape, with chip shortages and supply chain chaos, it’s clear who did their homework. The episode also set a template for modern trade warfare: use IP, regulations, and standards to win. China, it must be said, took that lesson to heart and annotated it extensively.

Then there’s the absurdly titled Chicken War. No, not a bad fast-food ad campaign. In the 1960s, the European Economic Community slapped tariffs on American frozen chicken, to protect local producers. The US didn’t take it well. But instead of going tit-for-tat on poultry, they decided to target… German vans. Enter the “chicken tax” — a 25% duty on imported light trucks like the Volkswagen Type 2. Germany was flabbergasted. Volkswagen scrambled to set up factories in the US just to dodge the tariffs. American car companies, meanwhile, were thrilled. Fewer competitors? Yes, please. Consumers? Less so. They paid more, had fewer choices, and the chicken tax stuck around like a bad smell. It still exists today. So every time someone buys a pickup in the US, they’re paying for a poultry squabble from the Kennedy era. Some companies got creative — shipping vans over with extra seats and converting them to trucks after landing, all to game the rules. Bureaucracy met ingenuity, and the result was gloriously ridiculous.

And then we have the Great Banana Battle of the 1990s. The EU, in a burst of post-colonial guilt or affection — no one’s quite sure which — gave trade perks to banana producers in the Caribbean. Sounds nice, unless you’re a Latin American banana grower linked to US giants like Chiquita and Dole, suddenly excluded from the party. Washington, in a mood, retaliated with 100% tariffs on French cheese, luxury handbags, and posh cosmetics. The connection to bananas was, let’s say, metaphorical. The WTO waded in, ruled in favour of the US in 1997, but the melodrama dragged on until 2001. Caribbean farmers, caught in the crossfire, saw their economies wobble. Many turned to tourism, artisanal farming, or just threw their hands in the air. The takeaway? Bananas can, in fact, become instruments of geopolitical posturing. And somewhere in all of this, someone definitely threw a Roquefort wedge at a trade envoy.

Let’s not forget the Japanese car saga of the same decade. Reliable, efficient, and increasingly stylish Japanese cars were flooding into the US. Detroit started sweating through its polyester suits. Instead of stepping up their game, American automakers ran to Washington, demanding help. A deal was struck — Japan voluntarily capped exports to 1.68 million cars a year. But Japan wasn’t done. It built factories in the US — Honda in Ohio, Toyota in Kentucky — effectively sidestepping the whole mess. American workers built the cars, local economies thrived, and consumers got solid vehicles. Everyone but the big US carmakers seemed pleased. Detroit doubled down on mediocrity, kept churning out clunky sedans, and slowly slid into irrelevance. Meanwhile, Japanese brands became household names — not as imports, but as local favourites. This wasn’t just about cars; it was about cultural adaptation. Assembly lines came with new management philosophies, and even lunch breaks started looking different.

What do all these stories have in common, besides a strange obsession with poultry and fruit? Trade wars almost never deliver what they promise. Politicians get headlines, tariffs get collected, and the public gets pricier goods and fewer choices. Global supply chains snarl, tensions rise, and sometimes, you end up with a permanent chicken tax just because someone got offended in 1962. The real winners? Companies that can pivot. Nations that think strategically. Leaders who don’t let pride override practicality.

So next time someone suggests a nice big juicy tariff to fix things — maybe offer them a biscuit and a seat instead. A friendly chat might do more for your economy than a 100% duty on handbags. And your lunchroom? It’ll stay a lot less messy.