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The term “trade war” seems more pervasive these days — on everything from TV pundits to TikTok experts. Oh, and that one uncle who always has an opinion? He’s chiming in with his take, too. Yet for all the “shots fired in the trade war” headlines you’ve seen, you might still not know what a trade war really is — or if your wallet could end up as collateral.
If you want a simple explanation, you could always turn to ChatGPT. That’s exactly what I did on your behalf–only I wanted an easy-to-understand, jargon-free approach. So I asked ChatGPT to explain trade wars and their impact on my wallet, like I was 12 years old.
As always, you’ll want to fact-check — since ChatGPT is far from perfect — but it gave me a solid baseline of information to guide my own research.
A Definition Even a Kid Could Understand
When asked what constitutes a trade war, ChatGPT gave me a succinct answer. In essence, a trade war involves countries fighting by charging each other extra money — in this case, tariffs — for the goods they buy and sell to one another.
To double-check this response, I hopped on ye olde internet and visited DW.com, the website for international publication Deutsche Welle, where I found an article about a potential trade war between the U.S. and China. In that article, writer Arthur Sullivan described a trade war simply:
“A trade war is an economic conflict in which countries implement and increase tariffs and other nontariff barriers against each other,” he wrote. “It typically arises from extreme economic protectionism and usually features so-called tit-for-tat measures, where each side increases tariffs in response to each other.”
So far, so good in terms of accuracy.
How the Trade War Stole My Lunch Money
Sullivan’s article broke down the trade beef between the U.S. and China, but I wanted a much simpler example. Treating me like a 12-year-old, ChatGPT brought me back to the schoolyard.
It asked me to imagine myself and another student trading lunch items. I gave him $2 to buy his cookie (I’m a sucker for a good peanut butter cookie, it’s true), and he gave me $3 for my juice box. Initially, we’re both happy. We feel the arrangement is fair.
But one day, I realized his cookies were a little stale. I decided he’d have to pay an extra dollar for my juice box. That, ChatGPT explained, is like a tariff — because I asked for extra money just to make the trade. Infuriated, my classmate told me I’d now have to pay an extra $1.50 for his cookie.
“Now you’re both just charging each other more for the same stuff,” ChatGPT said. “That’s a trade war.”
How It Hits My Wallet
ChatGPT explained that the impact of this lunchbox battle will show up in my piggy bank at home. I’m basically paying more for the same cookie — or, if my allowance doesn’t cover it, I can’t afford the cookie at all.
But my money woes don’t stop there. According to ChatGPT, my lunch could get smaller because I’m spending more on fewer things, and I’m saving less overall — which might mean no more candy after school. On top of that, my classmate and I are annoyed with each other, and we might stop trading altogether.
ChatGPT knows I’m curious about the real-world implications of an actual trade war, and it offers this summary:
“Countries are like you and the other kid. When they get in a trade war, you (and your parents) end up paying more for stuff like food, clothes, phones — even toys.”
Bottom Line: Trade Wars Are Far From Child’s Play
As ChatGPT puts it:
“A trade war is when countries fight over money and trading, and it makes your lunch cost more … even if you didn’t start the fight.”