Populist politicians and pundits sell tariffs as powerful economic weapons. Maybe the ultimate weapons. As Donald Trump has said, “I always say ‘tariffs’ is the most beautiful word to me in the dictionary.” And that’s saying something given how many words are in the dictionary.
Yet in reality, these tariff superweapons are more like self-harming boomerangs. That’s the lesson from Trump’s trade wars and, oddly enough, from the popular 1983 film “WarGames,” in which a Pentagon supercomputer discovers that some battles—especially the nuclear kind—can only be won by refusing to fight.
The same logic applies to trade: Once the shooting starts, everyone takes damage. Best not to play.
Trump’s tariffs, aimed at allies and adversaries alike, raised the average US tariff rate from roughly three percent to 20 percent. American consumers pay the price through higher import costs, while exporters face new barriers abroad. But the damage isn’t confined to the United States. Countries on the receiving end—from the EU to Japan to South Korea—had a choice: Retaliate with tariffs of their own, or make deals to contain the fallout. Most chose the latter.
That might look like foreign surrender and a big domestic win for Trump and MAGAnomics. Hard truth: it’s not. As Harvard University economist Jason Furman neatly explains in a recent Financial Times commentary, these so-called “concessions”—lower tariffs on US exports like agricultural goods and industrial equipment—weren’t bribes to the American president. They were domestic policy wins, delivering cheaper goods for their own consumers. Canada, which chose retaliation, may end up hurting itself more than it hurts America.
Underlying all of this is a persistent misconception that afflicts both regular folks and too many of their leaders: mercantilist thinking. This is the idea that trade is a zero-sum contest with clear winners and losers, the tally best determined in the size of trade surpluses and deficits.
But this worldview, while enticingly intuitive, is fundamentally anti-economic. It contradicts the core principles of modern economics: comparative advantage, consumer welfare, and mutual gains from voluntary exchange. Tariffs may feel like a savvy show of strength or leverage, but in most cases, they really are self-harming.
Furman: “The issue is that levying tariffs is like a person simultaneously shooting himself and another person in the foot. If the other person responds by shooting both himself and the original person in the foot, that would leave both unable to walk.”
The lesson from “WarGames” holds: When the inherent structure of the conflict guarantees mutual loss, refusing to escalate isn’t weakness, it’s wise strategy. The only winning move in a trade war is not to play. (Or maybe engage in some preemptive tariff lowering.) The next time the tariff saber is rattled, policymakers would do well to remember the lesson here—though I’m not optimistic. Maybe Trump’s quiet, tariff-skeptical advisers should hold a 1980s movie night at the White House.
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