A trade war is a side effect of protectionism that occurs when one country (Country A) raises tariffs on another country’s (Country B) imports in retaliation for Country B raising tariffs on Country A’s imports. Increased protection causes both nations’ output compositions to move towards their autarky position.
Trade wars could escalated to full conflict between states, as evidenced in the First Opium War which started after the Qing government blockaded its ports and confined British traders, resulted in the dispatch of British Navy to China and engage the Chinese Navy in Battle of Kowloon.
Some economists agree that certain economic protections are more costly than
others, because they may be more likely to trigger a trade war. For example, if
a country were to raise tariffs, then a second country in retaliation may
similarly raise tariffs. An increase in subsidies, however, may be difficult to
retaliate against by a foreign country.
Source – Wikipedia.
Regional Integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and security objectives, as defined by national governments. Regional integration has been organized either via supranational institutional structures or through intergovernmental decision-making, or a combination of both.
SOURCE: Wikipedia
