Putin's Trade War
The High Price of Protectionism: A Century of Trade Wars and Their Lessons
Whenever I find myself puzzled by one of Donald Trump’s positions, I ask a simple question: “What would Putin do?” Suddenly, it all starts to make sense. Unfortunately, this isn’t just an intellectual exercise—it’s the reality America faces today. Trump’s approach systematically weakens U.S. security, strains long-standing alliances, and erodes the very foundations of the 80-year peace that has kept major world powers from turning on each other. And now, with Trump 2.0, we’re not just dealing with political chaos—we’re facing a fresh round of nonsensical trade wars that threaten economic stability at home and abroad.
In 2018, President Donald Trump introduced the United States-Mexico-Canada Agreement (USMCA) as a replacement for the North American Free Trade Agreement (NAFTA). He hailed the USMCA as "the largest, fairest, most balanced, and modern trade agreement ever achieved." Trump's administration emphasized that the USMCA would deliver significant benefits to American workers, marking a historic shift in U.S. trade policy. So I guess they were wrong? But don’t worry, this time they’ll get it right!
Trade wars—those tit-for-tat tariff battles between nations—are often launched in the name of protecting domestic industries, correcting trade imbalances, or securing geopolitical advantage. But do they actually work? History suggests they create as many problems as they solve.
From the Smoot-Hawley Tariff Act of 1930 to the ongoing U.S.-China trade war, protectionist policies have often backfired, leaving behind economic pain, lost jobs, and strained diplomatic ties. Let’s take a closer look at some of the biggest trade wars of the last century and what they reveal about the true cost of economic nationalism. And while the U.S. and its trading partners suffer, there’s one country that quietly benefits from the chaos: Russia.
The Smoot-Hawley Tariff and the Great Depression
A Crisis Made Worse by Protectionism
During the early days of the Great Depression, U.S. industries and farmers were struggling. In response, Congress passed the Smoot-Hawley Tariff Act in 1930, raising U.S. import duties by an average of 20% to shield domestic businesses from foreign competition.
Over 1,000 economists warned President Herbert Hoover that it would do more harm than good. He signed it anyway.
The Fallout
The global reaction was swift. More than 25 countries retaliated with tariffs on U.S. exports. American exports fell by nearly a third, unemployment soared to 25%, and international trade collapsed by 66% between 1929 and 1934. Instead of protecting jobs, Smoot-Hawley deepened the crisis, making life harder for businesses and workers alike.
By 1934, Roosevelt rolled back many of its provisions, marking a return to negotiated trade policies.
Lesson learned: In an economic downturn, trade wars don’t create stability—they make things worse.
U.S.-Japan Trade Tensions in the 1980s
A Growing Trade Imbalance
By the late 1970s, Japan’s booming exports—cars, electronics, and steel—triggered alarm in Washington. U.S. automakers, in particular, struggled against a wave of high-quality, competitively priced Japanese imports.
Despite his reputation as a free-market champion, President Ronald Reagan took a protectionist approach. The early 1980s recession, combined with surging imports, led to trade restrictions aimed at Japan.
The U.S. Response
Japan agreed to voluntary export restraints (VERs), limiting car exports to the U.S.
Tariffs and quotas were placed on Japanese steel and electronics.
A 45% tariff was imposed on Japanese motorcycles to protect Harley-Davidson.
Did It Work?
The results were mixed. Detroit automakers improved efficiency, but car prices rose by 8%, costing American consumers billions. Meanwhile, Japanese companies responded by investing in U.S. factories, creating over 100,000 American jobs by 1991. Yet the overall trade deficit with Japan remained unchanged, proving that tariffs and restrictions rarely fix deep economic imbalances.
Lesson learned: Temporary protectionism can buy time, but it doesn’t solve fundamental economic issues.
The U.S.-China Trade War (2018-Present)
A Fight Over Trade Imbalances and Technology
The U.S.-China trade war stemmed from long-standing disputes over intellectual property theft, forced technology transfers, and an ever-growing trade deficit. By 2017, the U.S. was importing $500 billion in Chinese goods while exporting only $130 billion—a deficit that Trump sought to correct with aggressive tariffs.
The Impact
The U.S. imposed tariffs on $350 billion worth of Chinese imports.
China retaliated with tariffs on $100 billion of U.S. exports, targeting agriculture and manufacturing.
U.S. soybean exports to China fell more than 50%, shifting purchases to Brazil.
American consumers paid an extra $1.4 billion per month in 2018 due to tariff-induced price hikes.
The Federal Reserve estimated the trade war shaved off 0.3% of U.S. GDP (about $62 billion) by late 2019.
Who Came Out Ahead?
China adapted quickly, finding alternative markets and accelerating domestic semiconductor production to reduce reliance on U.S. imports. Meanwhile, U.S. manufacturing jobs declined, as higher input costs hurt industries more than tariffs helped them. The trade deficit remained, proving once again that tariffs are an ineffective tool for reshaping global trade.
Lesson learned: Tariffs often miss their intended target, creating unintended economic consequences.
Russia’s Silent Victory
While the U.S. and China battle over tariffs, Russia has quietly positioned itself as one of the biggest beneficiaries of global trade wars. Here’s how:
Stronger ties with China: With China seeking to reduce dependence on American goods, Russia has stepped in as a key supplier of energy, agricultural products, and raw materials.
Energy dominance: As Western supply chains face disruptions, Russian oil and gas remain vital, especially for Asian markets.
A weakened U.S. economy: Trade wars slow down American economic growth, making it harder for the U.S. to sustain costly foreign interventions and sanctions against Russia.
A push away from the U.S. dollar: As countries seek alternatives to dollar-based trade, Russia sees an opportunity to promote financial systems that bypass U.S. influence.
While Washington and Beijing trade blows, Moscow watches—and profits.
The Big Picture
A century of trade wars makes one thing clear: they rarely deliver the promised results.
Broad-based tariffs provoke retaliation, shrink trade, and often worsen economic downturns.
Temporary protection can buy time, but it’s not a long-term solution.
Trade wars don’t fix trade deficits—broader economic policies and innovation do.
The working class often pays the price through higher costs and lost jobs.
And while major economies slug it out, opportunistic players like Russia find ways to benefit from the disruption.
The appeal of tariffs and trade restrictions is understandable—they offer the illusion of control in a volatile global market. But history suggests that smarter strategies, combining targeted enforcement with policies that enhance competitiveness, are far more effective than economic warfare.
Because if there’s one thing history has made clear, it’s this: in a trade war, there are no winners—only lessons learned the hard way.
Sources:
U.S. Senate History – Smoot-Hawley Tariff Act (1930) (What Is the Smoot-Hawley Tariff Act? History, Effect, and Reaction)
Investopedia – Smoot-Hawley Tariff Act Effects (What Is the Smoot-Hawley Tariff Act? History, Effect, and Reaction)
Cato Institute – Research Brief on Smoot-Hawley and Trade Wars (The Smoot-Hawley Trade War | Cato Institute)
EconoFact – Lee Branstetter, “Lessons from Trade with Japan in the 1980s” (Do Trade Restrictions Work? Lessons From Trade With Japan in the 1980s | Econofact)
American Compass – “Import Quota that Remade the Auto Industry” (auto VER impacts) (The Import Quota that Remade the Auto Industry | American Compass)
Reagan Library Archives – Statement on 1987 Tariffs against Japan (Semiconductors) (Statement on Tariff Increases on Japanese Semiconductor Products | Ronald Reagan)
Wikipedia – “1983 Motorcycle Tariff” (Harley-Davidson case) (1983 motorcycle tariff - Wikipedia)
PIIE – Analysis of US-China Trade War Outcomes (Four years into the trade war, are the US and China decoupling? | PIIE)
Reuters – Coverage of China’s farm tariffs and U.S. exports (Trump's China tariffs trigger retaliation against U.S. farm products | Reuters)
World Economic Forum – Trade War Impact Summary (Rethinking trade and cooperation to navigate global shocks | World Economic Forum)