There are two kinds of trade wars: dangerous ones and dumb ones. The former is the kind that risks hurting the economy but has the chance of winning valuable concessions from trading partners and ultimately increasing the gains from trade. The second is the kind that hurts the country, even if it succeeds.
So far, unfortunately, much of U.S. President Donald Trump's trade war has been of the latter variety. He has done two very unwise things — imposed tariffs on intermediate goods and directed the trade war at U.S. allies.
Intermediate goods are materials and parts that manufacturers buy in order to produce things — for example, steel and aluminum are used to make cars, appliances, machinery, buildings and lots of other things. Tariffs on steel and aluminum give a boost to domestic producers of those metals, but at the same time they hurt other domestic manufacturers by raising the prices they have to pay. Unsurprisingly, Trump's tariffs have made life harder for U.S. manufacturers, increasing prices for metals and helping drive up manufacturing costs:
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