Trade Wars & Tariff Diplomacy: How steel, tech, & agriculture became front lines of a fragmenting global order

DATELINE AND LEDE

The global tariff cease‑fire declared at the Buenos Aires G‑20 in December 2018 now feels like a brief armistice in a much longer conflict. Seven years later, the world economy is still locked in overlapping rounds of “tariff diplomacy” in which governments weaponise duties, export controls, and standards to pursue goals that range from pure protectionism to climate policy and national‑security tech bans. The most consequential flashpoints—U.S.–China, U.S.–EU, and the United Kingdom’s post‑Brexit realignment—have concentrated pain and political theatre in three strategic sectors: steel, semiconductors and the wider tech stack, and food & fibre. This article traces the new playbook of economic nationalism, explains why these industries keep taking the first hit, and asks whether the system that replaced GATT after 1994 can survive another decade of “managed trade.”

1.  THE STRATEGIC SECTOR TRIAD

1.1 Steel: the original tariff magnet

Few sectors illustrate the marriage of politics and production better than steel. Heavily unionised, intensely local, and essential to defence procurement, steel provides a quick pathway for any leader who wants to look tough on trade. In March 2018 President Trump invoked Section 232 of the 1962 Trade Expansion Act to slap 25 percent duties on foreign steel and 10 percent on aluminium, citing “national security.” The tariffs never disappeared. Congress’s research service calculates that the expanded 232 docket now covers US$153 billion of imports, with the EU ranking third‑largest target in 2024 behind China and Canada.

European industry has borne the costs twice. First, as an exporter suddenly facing U.S. duties; second, as a domestic supplier drowning in surplus metal diverted from the U.S. market, which crushed European benchmark prices by an estimated 18 percent between 2018 and 2020. Germany’s Salzgitter idled blast furnaces in Eisenhüttenstadt; Italy’s Acciaierie d’Italia (ex‑Ilva) sought a state‑backed rescue. Brussels replied with “rebalancing” tariffs on Harley‑Davidson motorcycles, Tennessee bourbon, and a cocktail of U.S. farm goods.

China, meanwhile, quietly expanded exports to Southeast Asia and sub‑Saharan Africa. By 2024 it sold 94 million tonnes abroad, its highest volume since 2016, even as Beijing still claimed to be closing “zombie mills.” The irony: U.S. tariffs that were supposed to smother Chinese surplus production mostly rearranged shipping routes and punished allies.

1.2 Technology: the battlefield of sovereignty

If steel tariffs were blunt instruments, chip restrictions became scalpels. Washington’s 10‑October‑2022 export‑control package on advanced semiconductors and AI tools was tightened twice (Oct 2023, Dec 2024) before the March 2025 blacklist that added 38 Chinese fabs and design houses. In the same fortnight, Beijing counter‑punched: new export permits for gallium, germanium, and, most explosively, a requirement that rare‑earth magnets sold to Korea could not be re‑exported to U.S. defence contractors  .

Tech sanctions differ from tariff wars in three ways. First, they target inputs rather than finished goods, ricocheting through multiple tiers of supply chains. Second, allies matter: the U.S. spent two years wooing the Netherlands and Japan to deny EUV lithography and photoresist chemicals to China—a coalition never required for a simple tariff. Third, retaliation is asymmetric: China’s choke‑point in rare‑earth processing allows it to inflict pain without levying a single conventional duty.

The collateral damage is global. Qualcomm warns that China still generates more than 60 percent of its revenue; ASML’s order book slipped after it stopped servicing some deep‑UV machines in Shenzhen, and South Korea worries about battery‑grade graphite. The Biden–Trump trade continuum has therefore created a new doctrine of “selective decoupling”—cooperate on climate, vaccines, or AI safety summits, but ring‑fence anything with a quantum, hypersonic, or 5‑nanometre label.

1.3 Agriculture: the political pressure point

Tariffs on soybeans do more than shift trade balances; they shift Midwestern congressional races. When Beijing slapped 25 percent duties on U.S. farm products in July 2018, American shipments of soy collapsed from 32 million tonnes to 8 million in four months. A partial rebound followed the January 2020 “Phase One” accord, but China has never restored its pre‑war market share for U.S. corn or pork. In March 2025, after the White House raised penalties on Chinese EV imports, Beijing reinstated stepped‑tariff triggers on U.S. sorghum and dairy, blindsiding co‑ops already battling drought  .

Compensation has been costly. Washington issued three tranches of “Market Facilitation Program” cheques worth US$28 billion between 2018 and 2020, and Republican lawmakers now float an election‑year “Phase Two” farm rescue. Across the Atlantic, French vintners and Spanish olive growers faced their own trauma when the EU–U.S. Airbus–Boeing spat authorised mutual tariffs on agri‑exports in 2020, only partially suspended in 2023.

In sum, food tariffs achieve maximum headlines for minimum revenue because the victims—farmers—possess votes, media empathy, and lobby muscle. That combination ensures agriculture will remain the first hostage in any future trade row.

2.  U.S.–CHINA: FROM “TRADE WAR” TO GREAT‑POWER GEOPOLITICS

2.1 The long march from 301 to 2025

The initial U.S. tariffs arrived via Section 301 of the 1974 Trade Act, ostensibly to punish forced technology transfer. Yet five years and four administrations later, the dispute has mutated into a systemic rivalry. The October 2024 Indo‑Pacific Supply‑Chain Mineral Agreement signalled Washington’s ambition to carve non‑Chinese “friendly shoring” circuits for EV batteries, data centres, and quantum components. Beijing’s April 2025 rare‑earth export licences reveal its intention to weaponise upstream dominance in response. Trade policy is now strategy, not commerce.

2.2 Semiconductor sanctions and the supply‑chain scramble

Export controls rarely force sudden plant relocations; chip fabs cost US$10 billion and take four years to build. But they do accelerate boardroom timelines. Taiwan’s TSMC green‑lit its second Arizona fab in December 2023; Samsung committed another US$25 billion to its Texas complex three months later, while Intel revived talk of an Ohio “megafab.” India, too, has seized the opening: the government finalised a US$2.7 billion incentive package for Micron’s Gujarat assembly line and lobbied Apple suppliers Foxconn and Pegatron, betting India could double its share of global iPhone output from 14 percent in 2024 to more than 25 percent in 2025.

2.3 The tariff carousel returns

President Trump’s February 2025 executive order reinstated “reciprocal tariffs” averaging 26 percent on imports from any country with a bilateral surplus exceeding US$30 billion—China foremost. Beijing answered with calibrated pain on American farm goods and a diplomatic squeeze on Korean high‑voltage battery exports to the Pentagon. The cyclical pattern—tariff, retaliation, subsidy—has thus slipped from extraordinary shock to familiar choreography.

3.  U.S.–EU: ALLIES, YET ADVERSARIES

3.1 Section 232 steel: never fully resolved

Although Brussels and Washington reached a 2021 “steel‑aluminium truce,” the deal capped EU shipments through a tariff‑rate quota, not zero duties. When American demand rebounded in 2023, European mills quickly hit the quota ceiling and paid residual 232 tariffs on the overflow. Political friction reignited in late 2024 when the U.S. Commerce Department proposed expanding 232 coverage to “downstream” products such as wind‑tower plate and electrical‑steel cores—items central to Europe’s Green Deal industrial policy.

3.2 Digital Services Taxes and carbon borders

Technology fights are subtler. Half the OECD’s European members have implemented or proposed a Digital Services Tax (DST) that mainly strikes U.S. platform giants. Washington threatened retaliatory tariffs in 2024 but suspended action pending a global accord under the OECD’s Pillar 1 rules. That deadline has slipped three times, and the U.S. Trade Representative keeps investigation dockets open as leverage.

At the same time, Brussels launched its Carbon Border Adjustment Mechanism (CBAM) on iron, steel, cement, and aluminium. The U.S. Steel caucus loves the idea of taxing dirtier imports—but hates permitting the EU alone to set benchmarks. Both blocs therefore claim climate legitimacy while probing each other’s export flank, an economic variant of “co‑opetition.”

3.3 Airbus–Boeing: a parable in slow motion

The 17‑year WTO litigation over Airbus and Boeing subsidies provided a template for retailiatory tariffs far beyond aerospace. In 2020 the WTO authorised Brussels to hit US$4 billion of American goods and Washington to hit US$7.5 billion of EU exports. Scotch whisky, Italian cheese, and Californian wine found themselves pawns in a jetliner feud. The parties suspended tariffs for five years in June 2021 to negotiate a new subsidy code, yet no binding rules have emerged. As the clock ticks toward 2026, lobbyists for both firms are drafting contingency target lists—proof that even a truce can be temporary when structural subsidies remain.

4.  THE UNITED KINGDOM: SOVEREIGN BUT SEARCHING

4.1 Steel after Brexit: stranded between two regimes

Post‑Brexit Britain discovered that regaining tariff autonomy also meant shouldering rules‑of‑origin paperwork and a smaller bargaining chip. UK Steel’s 2024 report shows exports down 18 percent from 2019, with shipments to the EU falling fastest because minor processing in Britain no longer qualifies as “EU origin” once re‑exported  . Domestic producers also remain under the EU’s CBAM shadow: if they sell into the Continent, they will pay the levy unless London mirrors Brussels’ carbon price.

4.2 The elusive U.S.–UK FTA

Successive UK governments promised a flagship free‑trade deal with Washington, yet four rounds of exploratory talks under Biden produced only a “dialogue.” Congress, not the White House, must grant “trade promotion authority,” and a bipartisan bill to authorise UK negotiations was re‑introduced only in February 2025  . Meanwhile, American steel tariffs still apply to British mills. The UK secured a Section 232 quota similar to the EU’s, but capacity is small and often exhausted by April each calendar year, forcing late‑season shipments to pay the 25 percent duty.

4.3 Northern Ireland: agri‑food borderland

The Windsor Framework of 2023 eased some checks on goods moving from Great Britain to Northern Ireland, yet supermarket lorries still require “green lane” certificates. For cattle and seed potatoes the EU’s sanitary‑phytosanitary rules dominate, meaning English calves cannot re‑enter Great Britain via short‑sea loops without extra vet paperwork. Farm unions warn the Protocol’s dual‑regulatory model could shave 4‑percent off NI dairy margins by 2026 if sterling weakens, while Scottish lamb exporters grumble that their UK‑wide supply chain has become a customs sandwich. Analysts at Farmonaut note that the “trade friction cost” is now embedded in livestock hedging contracts  .

5.  CROSS‑CUTTING PATTERNS IN TARIFF DIPLOMACY

5.1  From retaliation to realignment

Early tariff wars followed a predictable tit‑for‑tat: steel for bourbon, soy for pork. By 2025 the objective has shifted to supply‑chain relocation. The U.S. curbs Chinese chips to entice allied fabs; China plays the critical‑minerals card; Brussels uses CBAM to “on‑shore” green industry. Tariffs thus no longer aim only at changing partner behaviour: they seek to re‑wire entire production ecosystems.

5.2  The rise of negotiated quotas and pauses

Pure tariff cuts are rare; instead, governments exchange tariff‑rate quotas (EU–U.S. steel), suspensions pending talks (Airbus–Boeing), or 90‑day tariff pauses (the Trump administration’s April reprieve for allies)  . These mechanisms buy time, but they also normalise perpetual negotiation. Business cannot assume stability—only rolling windows of partial relief.

5.3  Subsidies as the new tariff

The U.S. CHIPS Act, EU’s Important Projects of Common European Interest (IPCEI) for batteries, and India’s Production‑Linked Incentive (PLI) schemes illustrate how fiscal transfers complement border duties. Subsidies dodge WTO ceilings by claiming national‑security or climate exemptions, but their effect mirrors tariffs: they redirect investment geographically.

5.4  Political economy feedback loops

Sectoral concentration matters. Steel workers cluster in swing states; soybean farmers dominate the U.S. Senate via the Dakotas and Iowa; chip engineers concentrate in Taiwan’s Hsinchu and Arizona’s desert. When tariffs hit, the political amplification is immediate. Legislators then hurry to craft carve‑outs, which create new distortions—farm bailouts or “melted‑and‑poured” steel definitions—that invite further lobbying. The tariff machine becomes self‑propelling.

6.  LOOKING AHEAD: CAN THE RULES‑BASED SYSTEM ADAPT?

6.1  WTO limbo and plurilateral reality

The World Trade Organization’s Appellate Body remains defunct four years after its last sitting. Washington still blocks new judges; Beijing and Brussels file panel requests with little hope of final adjudication. Into the vacuum pour minilateral clubs: the Indo‑Pacific Economic Framework (IPEF) pursues supply‑chain resilience; the Comprehensive and Progressive Agreement for Trans‑Pacific Partnership (CPTPP) balloons to 14 members with Britain’s accession; the EU eyes a Carbon Club with G‑7 partners. None replaces the WTO’s universality, but together they form a patchwork of norms that businesses must memorise like airline lounge memberships.

6.2  Climate and security conflate trade and values

The next wave of disputes will fuse carbon metrics with human‑rights audits. The EU already conditions green‑hydrogen imports on “sustainability certificates”; the U.S. Uyghur Forced Labor Prevention Act blocks solar panels if polysilicon origin is murky. Here tariffs morph into morals. That raises compliance costs—and turns trade negotiators into ethicists.

6.3  What resilience really costs

Economists at Katana MRP calculate that American manufacturers now pay a weighted‑average 9 percent tariff on intermediate inputs, triple the 2017 level, while PMI readings flirt with contraction as companies digest price hikes  . Yet boardrooms accept higher costs as insurance against single‑source fragility. The eventual consumer bill—perhaps a permanent 1–2 percent inflation premium—may be the price of geopolitical hedging.

7.  CONCLUSION: A FRACTURED BUT ADAPTIVE ORDER

Trade wars no longer shock; they structure expectations. Steel duties, chip controls, and soybean embargoes taught firms to carry dual suppliers, triple country‑of‑origin certificates, and more lobbyists per container. The damage is real: misallocated capital, slower diffusion of technology, and inflationary supply bottlenecks. But so is adaptation: Brazilian farmers supplant U.S. soy in China; Indian smartphone lines scale up; European mills pivot to low‑carbon “green steel” niches.

Tariff diplomacy is therefore neither Cold‑War autarky nor pre‑2016 laissez‑faire. It is an iterative game in which states weaponise interdependence while racing to rebuild portions of it under new flags. The implications for strategic sectors are stark. Steel will stay politicised until global emissions‑based pricing harmonises—a distant prospect. Tech will bifurcate into U.S.‑led and China‑centric ecosystems unless a new détente emerges. Agriculture will continue as the quickest retaliatory lever whenever talks stall.

For companies and countries alike, the task is not to predict the next tariff—it is to design operations that remain profitable across a mosaic of shifting preferences, price signals, and political moods. The post‑war liberal trade order is not dead; it is contested, patched, and partial. Whether it evolves into a coherent successor or splinters into incompatible blocs will depend on the same alchemy that fuels every tariff battle: domestic politics, security anxieties, and the scramble to control the technologies that power tomorrow’s economy.

In short, trade wars have matured from episodic crises into the permanent background noise of global commerce. Navigating that noise with strategic foresight—rather than nostalgic calls for a return to frictionless trade—will determine which nations and firms emerge stronger when the next round of tariff diplomacy begins.