What is a trade war? Help your kids understand global news
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Think your kids are too young to talk about global economics? It's never too early for basic financial education. Roughly 65% of Americans today say finances are their biggest source of stress. Helping your kids understand how the economy works — even in complicated times — helps set them up for a better financial future. That's why Greenlight is so determined to bring financial education to the next generation.
So, how do you explain a trade war to your kids? Read on for tips on talking to your kids about trade wars, tariffs, and current economic events.
What is a trade war? Understand it first, teach it better
One way to teach kids financial literacy is through the lens of real-world events or issues. If your child has heard the term "trade war" on the news or at school, it can be a complex topic to explain. So we've broken down the basics of trade wars and how to answer questions in a clear, non-biased way.
What is a trade war in simple terms?
Simply put, a trade war is an economic conflict between two or more countries over the international trade of goods. It often starts when one country disagrees with another's international trading policies. For example, one country might decide to raise its tariffs (taxes on imported or exported goods) or introduce trade barriers. Sometimes, the conflict can escalate if one or both parties apply pressure with new barriers or other methods until an agreement is reached.
Why do trade wars happen?
Be a financially smart family!
Trade wars are complex, with nuanced interests that aren't always public. But you can explain the neutral basics of why a government or entity might approve or disapprove of a trade war.
Some reasons a government might initiate a trade war include:
Supporting domestic businesses by limiting imported products
Protecting the national economy
Solving economic conflicts without violence
How trade wars can potentially impact everyday life:
Higher prices on imported goods
Increased risk of economic recession
Negative financial impact on domestic companies that import or export goods
Potential escalation to more serious forms of protectionism (higher tariffs, trade bans, etc.)
How to explain a trade war to your 10-year-old
Terms like "international trade policy" or "protectionism" might be sophisticated for a 10-year-old. Try to explain trade wars in language they understand. Here are a few tips to help you break down this topic into everyday terms that they can relate to.
Use relatable examples
Think of some real-life examples kids can relate to. For example, imagine your friend wants to trade an apple for your cookie. Perhaps you think that's unfair because you believe the cookie is worth more. So, you offer to trade the cookie for their apple and their crackers — that's kind of like a tariff.
Simplify the terms
Break down economic terms into simpler phrases your kid can understand. Try these swaps:
Tariffs and duties = taxes or extra charges
Imports = things our country buys from other countries
Exports = things our country sells to other countries
Trade deficit = buying more than you sell
Economic sanctions = consequences, such as not trading with another country
Another important term to simplify is the phrase "trade war" itself. Make clear that it's a type of disagreement between countries, not the kind of "war" they hear about in history class.
Use visuals
Kids are often visual learners. Try drawing a picture of two countries, using arrows to demonstrate imports and exports. You can also make this an interactive activity by "trading" marbles or coins between the countries.
5 questions kids might ask about trade wars — and how to answer them
Kids are curious. No matter what you're trying to explain, they're bound to have a few questions. One way to help them expand their financial knowledge is by utilizing some of the best financial resources for kids: books, podcasts, websites, and more. The best thing you can do is answer them in simple, easy-to-understand terms.
Why can't countries just get along?
Most world leaders strive to maintain good relations. But sometimes disagreements happen, just like between you and your friends. Sometimes, trade wars start because both countries want what is best for their citizens, and that causes a disagreement.
How does this affect us?
Hopefully it won't! However, we could see prices increasing at the grocery store or the gas station. That's why it's so important to have a budget and manage our money wisely, so that even if things get a little more expensive, we can still maintain financial freedom.
What are tariffs, and why do they matter?
A tariff is a type of tax. When a country buys something from another country, the seller may charge the buyer a tax. Tariffs can increase the cost of goods from other countries.
Here's an example you can use with kids:
Imagine I'm from France, and I want to sell you an apple for $1. But your country has a 25% tariff. So I'll have to pay an extra $0.25 for the sale, so I'll only earn $0.75 total.
In response to your country's tariff, I will start charging $1.25 for each apple, so I can still earn $1 per apple. That means you pay more in the end.
(Consider using quarters to demonstrate this example visually.)
Can a trade war lead to higher prices?
Trade wars might increase the cost of certain goods, particularly those imported from other countries.
Help your kids learn about global economics with Greenlight
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This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.
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