A trade war is when...

Countries answer tariffs with more tariffs

Who pays a tariff at the border?

The company importing the goods

A tariff is a tax on imported goods. The importing company pays it at the border, and often passes it on to shoppers.
When the other country answers with its own tariffs, and the first hits back again, you get a trade war.
In 2018–19 the US and China put tariffs on hundreds of billions of dollars of each other's goods. Soybean farmers, chipmakers and shoppers all felt it.
In April 2025, sweeping new US tariffs sent markets tumbling: the S&P 500 fell about 12% in four trading days. When a 90-day pause was announced, it jumped over 9% in one day.
Trade wars redraw maps. Many factories moved from China to Vietnam, Mexico, India or Indonesia, and in 2023 Mexico became the US's biggest trading partner.
Common mistake
Mistake: “tariffs are paid by the foreign country.” The importer pays at the border, and the cost is usually shared by companies and shoppers at home.
Key takeaway
A tariff is a tax on imports. Trade wars raise costs, shake markets and shift where things get made.

A tariff is... A tax on importsIt's charged at the border when goods enter the country.
A trade war is when... Countries answer tariffs with more tariffsEach side hits back, so tariffs keep escalating.
Trade wars can lead factories to... Move to other countriesCompanies shift production to places the tariffs don't hit.
Who pays a tariff at the border? The company importing the goodsThe importer pays, then usually passes part of the cost on to customers.