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Trade Wars: A New Normal?

  //business-finance.news-articles.net/content/2026/02/25/trade-wars-a-new-normal.html
  Published in Business and Finance on Wednesday, February 25th 2026 at 3:29 GMT by Seeking Alpha
      Locales: UNITED STATES, CHINA, JAPAN, EUROPEAN UNION, TAIWAN PROVINCE OF CHINA

From Trade Wars to a New Normal?

The era of escalating trade tensions, which began in 2018, left an indelible mark on the global economy. The US, under previous administrations, implemented tariffs on hundreds of billions of dollars worth of goods, targeting countries like China, Mexico, and Canada. While some concessions and partial rollbacks occurred, a significant number of tariffs remained active as of early 2026. These duties acted as a drag on global supply chains, increased costs for businesses and consumers, and fostered an environment of instability.

The initial justification for these tariffs often centered on addressing trade imbalances and protecting domestic industries. However, the long-term effects proved far more complex. While certain sectors, like steel and aluminum, experienced a temporary boost, many others suffered from increased input costs and reduced export opportunities. The disruption to supply chains forced companies to rethink their sourcing strategies, leading to increased investment in reshoring and nearshoring - trends that have continued to accelerate.

The Legacy of the 2024 and 2028 Elections The 2024 US presidential election proved to be a watershed moment. The policies enacted by the winning administration significantly solidified, or dramatically altered, the tariff landscape. The subsequent 2028 election further cemented these changes. The degree to which the US prioritized multilateral cooperation versus a more protectionist approach has been a key determinant of the current situation.

If the post-2024 administration favored a collaborative approach, we would likely see a gradual reduction in tariffs and a renewed emphasis on negotiating trade agreements. Conversely, a continuation of protectionist policies led to a further escalation of trade tensions, with potentially devastating consequences for global economic growth.

Current Scenarios in Early 2026

As of today, the landscape reflects a mixed picture. While a complete dismantling of all tariffs hasn't occurred, a degree of normalization is evident. However, several key tariffs remain in effect, and the threat of new duties looms large. Let's examine the prevailing scenarios:

• Scenario 1: Controlled Reduction & Strategic Tariffs: This scenario has seen a careful and targeted reduction of some tariffs, particularly those impacting essential goods and supply chains. However, strategic tariffs remain in place on specific products deemed critical for national security or where domestic industries require protection. This has resulted in moderate relief for businesses, but ongoing complexity for international trade.
• Scenario 2: Sustained Protectionism: In this scenario, tariffs established in the early 2020s largely remain in place, with occasional additions. The focus is on incentivizing domestic production and reducing reliance on foreign suppliers. This has led to higher consumer prices and limited trade, but a noticeable strengthening of certain domestic industries.
• Scenario 3: Fragmented Multilateralism: This scenario is characterized by a patchwork of bilateral and regional trade agreements, with limited progress towards comprehensive multilateral solutions. Tariffs vary significantly depending on the specific countries involved, creating a complex web of regulations and challenges for businesses operating internationally.

Sectoral Deep Dive: Winners and Losers

The impact of tariffs has been unevenly distributed across different sectors.

• Manufacturing: While tariffs on raw materials continue to increase production costs, the reshoring incentives have led to growth in domestic manufacturing. Automation and advanced technologies are playing an increasingly important role in mitigating these cost increases.
• Agriculture: The agricultural sector remains vulnerable to retaliatory tariffs. Diversification of export markets and a focus on value-added products are crucial for farmers to mitigate these risks.
• Technology: The technology sector continues to be heavily impacted by tariffs on semiconductors and other critical components. This has spurred investment in domestic chip manufacturing, but the industry still faces significant supply chain challenges.

Investment Strategies in a Tariff-Shaped World

Investors must adopt a nuanced approach to navigate this complex environment. Prioritizing companies with diversified supply chains and strong pricing power is essential. Companies that can absorb or pass on tariff costs are better positioned to succeed. Furthermore, investing in industries that benefit from reshoring and domestic manufacturing can offer attractive opportunities. Diversification across geographies and asset classes is also crucial to mitigate risk.

Looking Ahead The future of tariffs is inextricably linked to global geopolitical dynamics and domestic economic considerations. While a complete return to pre-2018 trade patterns seems unlikely, a more stable and predictable trade environment is essential for fostering sustainable economic growth. Businesses and investors must remain vigilant, adapt to changing conditions, and prioritize long-term resilience over short-term gains.