Hi, I'm Vaibhav Tandon, Chief International Economist for Northern Trust. War should never be a first resort as conflicts leave the landscape scarred and citizens on all sides worse off. This is true for both military and commercial confrontations. We'd do well to keep this in mind as we monitor the ongoing trade war between China and the United States. The conflict has widened in scope and scale and could escalate further in the years ahead.

It's hard to remember, but just four years ago, there was hope of de-escalation. Beijing and Washington reached the phase I trade truce at the start of 2020, which paused further restrictions. But the accord provided no clear path towards removal of tariffs. This illustrates an important point. When tariffs are applied, it is difficult to relax them.

The pandemic added to existing trade tensions as China became a less reliable source. A desire for supply chain resilience has contributed to a significant reconfiguration of global trade patterns. As companies work to reduce concentrations of Chinese imports, supplies from North America and some Asian economies have stepped forward. But the progress of reshoring has been slow. And the new networks are likely to be less efficient and more costly than the ones they are replacing.

China has worked to evade some restrictions through a practice called white labeling, in which goods make their way into the US through Chinese-owned facilities in places like Vietnam and Mexico. This has opened a new front in the trade war, which the United States is working to close.

Trade wars are usually a loss for all countries involved. US tariffs currently affect about 18% of imports from China, while China's tariffs cover about 11% of goods imported from the US. Various academic and governmental studies have concluded that the Trump-Biden tariffs have raised prices, reduced output, and slowed employment.

Meanwhile, investments in China have plunged amid geopolitical tensions and de-risking of supply chains. If tariffs were to be hiked to 60% as some have proposed, it could knock up to 2.5 percentage points of Chinese gross domestic product growth over the subsequent four quarters. China's economy is struggling, and it can ill afford more conflict.

The Chinese military strategist Sun Tzu wrote that "strategy without tactics is the slowest route to victory, and tactics without strategy is the noise before defeat." With trade strategy and tactics both unclear, a prolonged and expensive stalemate appears likely. The landscape of global commerce will be forever scarred.