Trade Wars and the Fragile Balance of Emerging Economies

By Neeti Daryapurkar

What is Trade Wars? They occur when countries impose tariffs or other trade barriers on each other in retaliation. These steps are initially taken to protect domestic industries but often end up escalating tensions and disrupting global trade flow.

Trade Wars have been making quite their place on the headlines over the past decade. From tariffs to ongoing tensions between other global powers. While these conflicts often affect the world's largest economies , they also have strong ripple effects on the emerging economies (countries which are still in the process of growth and industrialization).

Emerging economies like India, Brazil, South Africa, Vietnam, Indonesia, and so on find themselves suffering in this crossfire.

Trade Wars tend to badly affect the supply chains. How? Well if a laptop is designed in the US , its components are from China and it is assembled in Vietnam then naturally a trade war will affect all of this. This can also lead to job losses in export sectors and even reduction in FDI (Foreign Direct Investment).

They also bring economic uncertainty which leads to investors pulling out money from markets. Thereby causing fluctuations in emerging markets , making it more expensive for these countries to export essential goods. As mentioned before Trade Wars make exports difficult, this causes the countries heavily depending on exporting vulnerable.

In the end, Trade wars highlight just how interconnected the global economy is. While the big players may dominate the headlines, emerging economies often bear the silent burden.