“trade war: A situation in which two or more nations restrict one another’s exports. Trade wars are ancient and modern. Until Adam Smith and the contemporary physiocrats. No thinkers believed in free trade. All economists believed that the best policy was to maximize one’s own exports; many added that it was good to restrict others’ imports. If pursued worldwide, such policies were obviously self-defeating, but that does not lessen their attraction to individual national policy makers. The Napoleonic Wars were largely a trade war between France and her allies and the UK, which caused serious damage to third parties, such as the USA.
The nineteenth century saw the heyday of the bilateral trade treaty and the invention of the most favored nation clause. Between them, these devices restricted the scope for trade wars. However, the revival of protection in the 1920s and 1930s revived trade wars. Since the 1960s, world trade politics has become multilateral rather than bilateral (GATT, World Trade Organization). This has not eliminated trade wars, but has made them multinational also. If the EU declares war on US hormone-fortified beef and export subsidies, then the USA may declare war on EU luxury goods and Caribbean bananas.”
Excerpted from: McLean, Iain, and Alistair McMillan, editors. Oxford Concise Dictionary of Politics. New York: Oxford University Press, 2003.
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