“Freedom of trade among the nations is an essential factor in securing and maintaining the peace of the world,” the Free Trade League of America said in a passionate appeal.
“History gives evidence that wars have very largely been the result of the struggle for markets, of protests against tariff barriers and prohibitions.”
The year was 1921 and the appeal went unheeded.
Tariffs and trade barriers, including those imposed by the United States in the years to follow, shaped a global environment that helped put the world on the road to World War II. Even more directly, the U.S. oil embargo on Japan in mid-1941 was a spur for the attack on Pearl Harbor that brought the United States into the war.
From at least the time of Ancient Greece, tariffs and trade restrictions have been a factor behind wars. As U.S. President Donald Trump imposes tariffs worldwide and particularly on America’s greatest rival, China, the question is whether it will happen again.
Tariffs Raise Tensions
“Considering how quickly we’ve seen U.S.-Canadian relations sour since Trump’s announcement of punitive tariffs just a few months back, it’s easy to imagine how, historically, trade conflicts can heighten nationalist tensions, geopolitical rivalry, and enhance the possibility of military conflict,” said Exeter University historian Dr. Marc-William Palen, author of Pax Economica: Left-Wing Visions of a Free Trade World.
“Of course, this gets into a gray area surrounding correlation versus causation, but most peace workers and anti-imperialists since the mid-19th century have argued that protective tariffs, embargoes, and sanctions lead to trade wars and quickly turn allies into enemies.”
Among the earliest examples were the economic sanctions and trade restrictions imposed by Athens before 430 B.C. on the city-state of Megara, an ally of Sparta, under the so-called Megarian Decree: a factor in the ensuing Peloponnesian wars.
Painting by Robert Dodd shows the USS Chesapeake (left) as it approaches the HMS Shannon during the War of 1812. The Chesapeake is flying a flag that states ‘Free Trade and Sailors Rights.’
Photo by Buyenlarge/Getty Images
Other wars linked to tariffs, trade and taxes include those between the English and Dutch in the 17th century, the American Revolutionary War and the war of 1812—after the British stopped Americans accessing lucrative foreign markets. Palen also cited the tariff war between Austria-Hungary and Serbia as a factor in the lead-up to World War I.
“History is littered with examples of trade disputes escalating into armed conflict,” says the website of the World Trade Organization, which was set up after World War II in part to avoid a repeat of the pre-war trade tensions. “It’s a claim that should not be exaggerated, but there is truth in it.”
Will U.S. and China Fight?
As in the case of the once dominant United States and rapidly militarizing China, trade wars may be part of an overall competition for power and therefore as much an indicator of hostilities to come as a cause of them.
“It is easier to find example of wars leading to trade barriers than the reverse. And wars are typically the product of many factors, so it is important not to exaggerate the impact of trade barriers as a causal factor,” Kevin O’Rourke of CNRS and Sciences Po in Paris told Newsweek. “Nonetheless, trade barriers can heighten tensions between countries, heighten nationalism, and empower those seeking confrontation.”
Whether or not that was the intention, Trump’s imposition of increasing tariffs on China has been met by defiance rather than discussion.
“In essence, what China now declares is that it is prepared to fight to the end: trade war, tariff war, technology war, or real war,” Victor Gao of the Center for China and Globalization, a Beijing think tank, told Al Arabiya television.
Decoupling Economies
Disconnecting markets as a result of a trade war can also remove an obstacle to conflict, in that closely bound economies may be less likely to go to war because of the risk of damage that either would face.
If the damage has already been done and economies have essentially decoupled from each other already, then there is less additional risk to consider through outright confrontation. With threats of U.S. tariffs as high as 245 percent, the risk to trade is not that it becomes more expensive but that it ceases altogether.
Trade restrictions are also a sensitive subject for China, with Communist Party leaders long pointing to the “century of humiliation” China endured after its markets were forced open by British and other Western imperial powers seeking to sell opium and other goods in the 19th century.
Trump now accuses China of restricting its domestic market for U.S. and other foreign exporters, as well as of intellectual property theft, currency manipulation and subsidies to give it an unfair economic advantage that is taking U.S. jobs and also helping it fund a military buildup that challenges the United States.
“China’s historical memory is longer than most. Ever since the European imperial powers used gunboats to force open and carve up Chinese markets across the 19th century, subsequent Chinese governments have remained quite sensitive to any perceived coercive Western trade policies directed against them,” Palen.
“While the growing tariff war between the U.S. and China doesn’t make military conflict certain, it does make the possibility more likely.”