With tariffs between the United States and China still in place—and new measures emerging—there’s a growing sense of permanence in the standoff between the world’s two largest powers. Neither side seems inclined to back down. Is this sustainable? And has anything like this happened before?
Smoot-Hawley and the ghost of the 1930s
The most famous cautionary tale is the Smoot-Hawley Tariff Act of 1930. It raised US tariffs on hundreds of imports during the onset of the Great Depression. Dozens of countries retaliated. Global trade collapsed by more than 60%. The result was deeper economic pain worldwide.
Eventually, this led to a rethink. Postwar leaders created the General Agreement on Tariffs and Trade (GATT), and later the WTO, to ensure countries couldn’t repeat the spiral. Until recently, the idea of a tit-for-tat tariff war between major powers seemed unthinkable.
The Chicken War’s long shadow
In the 1960s, a dispute over poultry exports led Europe to slap tariffs on American chicken. The US retaliated with a 25% tariff on imported light trucks. Europe backed off on chicken; the US kept the truck tariff.
That 25% “Chicken Tax” still exists. It helped American automakers dominate the pickup truck market for decades. It also shows how temporary retaliatory measures can become permanent fixtures—especially when domestic industries grow around them.
The U.S.–Japan tensions of the 1980s
In the 1980s, US leaders viewed Japan as a rising trade threat. They imposed tariffs and quotas, especially on cars and semiconductors. Japan responded with “voluntary” export limits and some market opening. Tensions were high, but full-scale trade war was avoided.
Over time, Japanese firms built plants in the US, defusing pressure. Meanwhile, Japan’s economy cooled. The trade imbalance persisted for years, but the confrontation softened. The lesson: not all trade rivalries end in capitulation. Some resolve through diplomacy and structural shifts.
Why the U.S.–China conflict may not end soon
The current U.S.–China standoff is different in scale and character. It involves not just trade, but technology, security, and ideology. Tariffs are just one part of a broader economic decoupling. Unlike Japan in the ’80s, China is unlikely to voluntarily limit its exports or hollow out its state-led economic model.
What might end the standoff? History suggests two paths: either external crisis forces a reset (as in the 1930s), or mutual interests gradually reassert themselves through negotiation and adaptation (as with Japan). For now, neither looks imminent.
But one thing is clear: once tariffs are in place, they’re hard to unwind. Interests form around them. Trade routes adapt. Even if peace breaks out, the economic landscape won’t snap back. The longer the US–China tariff war lasts, the more it will shape global trade patterns for the long haul.
