The week the tariff clash begins to take effect saw many nations expressing concern about the economic pain these combat might inflict, reflecting the significant shift in American trade policy under President Trump in 2025.

The ‘’Tit-for-Tat measure  taken by affected  countries against  a major economic impose  in the way of tariffs, sanction or other trade barriers, is often described as a response to the dynamics of “trade conflict’’

The persistent belief—often called the “American tariff illusion”—imposing tariffs on imports may strengthen the U.S. economy, protect domestic jobs, and generate government revenue with minimal downsides. However, this belief overlooks broader and often negative consequences, especially in foreign relations and global economic dynamics.

The US-China trade confrontation has significant unintended negative consequences to be experienced by third-world countries, especially developing and least-developed economies. The low-income and least developed economies (LDEs), especially those dependent on Chinese manufacturing inputs, will face substantial economic challenges due to their integration into global supply chains even if these countries remain neutral on the trade conflict linked to China and the US.

The initial effect of U.S. tariff increases may be a reduction in imports and a narrowing of the trade deficit. However, this effect tends to be short-lived and dissipates over time due to several interconnected factors.

Tariff increase benefits are outweighed by broader economic costs and diplomatic strains. The “tariff illusion” underestimates these complex and often adverse effects on both the U.S. and global economic interaction.

This makeshift tariff benefits mask a tangled web of longer-term consequences. Tariffs raise the price of imported goods, instigate global supply chains to face higher production costs, and this may stifle innovation and competitiveness.

The increase in tariffs often triggers retaliation risks where affected trade partners respond by imposing their own tariffs, leading to a cycle of escalating trade barriers. This tit-for-tat dynamic can rapidly intensify tensions between countries and evolve into full-blown trade wars among major economic powers.

The avenging dynamics in trade refer to a retaliatory strategy where one country responds to another country’s tariff imposition or sanction by imposing similar acrion in return. This approach is rooted in game theory, specifically the tit-for-tat strategy, where a player mirrors the previous move of the opponent to either cooperate or retaliate,

Initially tariffs are usually imposed to protect domestic industries or address perceived unfair trade practices among tread partners. However, in the interconnected economic systems where gains in one sector can be wiped out by losses elsewhere can cause political backlash between tread partners.

In 2018, the U.S. imposed tariffs on $250 billion worth of Chinese goods, citing unfair trade practices and intellectual property concerns. China on the other hand retaliated with tariffs on $110 billion of U.S. exports, targeting key sectors like agriculture and energy. Thus tariffs harms industries on both sides.

This shows a complex behaviour of markets that adapt new directions where policymakers didn’t anticipate. Thus, trade wars have broader political and strategic implications, straining diplomatic relations and undermining trust in international trade agreements.

As this disrupt supply chains, multinational companies scrambled to reroute production and sourcing, leading to delays and increased costs on material. Tariffs imposed on imported goods have largely been passed on to consumers, resulting in noticeable price increases on a wide range of products, including electronics and food.

Smartphones, laptops, video game consoles, and other devices are expected to see significant price hikes. For example, tariffs on Chinese imports have led to estimated price increases of up to 26% in some electronics categories. A laptop costing ETB 52000 before tariffs could rise by about 36% where the new cost will be ETB 70720 in retail price after tariffs are factored.

The tit-for-tat dynamics of tariff shall slow global trade growth, with ripple effects felt in emerging markets and trade-dependent economies. Though tariffs may initially seem like a straightforward tool to protect domestic industries or address trade imbalances, their broader effects often prove to be more complicated and problematic.

Global trade conflicts triggered by major economic powers through tariffs, imposed sanctions or other protectionist measures—often have severe spill over effects on smaller, trade-dependent economies. They suffer from increased costs, disrupted supply chains, and reduced market access. Trade uncertainty may also trigger capital outflows or exchange rate fluctuations, worsening inflation or debt burdens.

It is true that economic interdependence boosts growth: Smaller and developing economies benefit from being integrated into global trade and supply chains, which can accelerate their output and development opportunities. However, this integration also means that shocks in one part of the world can quickly propagate and affect these economies adversely.

The irony is that the more interconnected the world becomes, the more vulnerable the smaller threads in the global tread fabrics. This is the profound puzzle of globalization: the same interconnectedness that fuels growth for smaller economies also magnifies their fragility when conflicts arise.

Tight integration means shocks spread faster. The trade conflicts triggered by major economic powers through tariffs, imposed sanctions or other protectionist measures—often have severe spill over effects on smaller, trade-dependent economies

A tariff on Chinese components can halt factory lines in Mexico, Ethiopia and Cambodia’s garment sectors. Sanctions on Russian gas may starve small European economies. US-China trade war, affects countries dependent on Chinese fabrics. They shall face collateral damage despite neutrality.

Least-developed countries (LDCs), despite minimal involvement in the hostilities, face overwhelming challenges such as disrupted supply chains, increased costs, and reduced export markets. The recovery requires tiresome struggle.

The ripple effects on global commercial relation is unavoidable. Tariffs imposed by the US and China increase production costs for intermediate goods, which then cascade through different trade web to make products more expensive in third world countries

As the saying goes, when there is such a clash or jungle fight among elephants of the game, the tremble is fiercely felt by those with least footing. The conflict disproportionately affect the most vulnerable small or weaker economies. That’s the paradox of globalization or interconnectedness.

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