Kristina Hooper is chief global market strategist at Invesco. The opinions expressed in this commentary are her own.

Over the last several decades, lower tariffs and relaxed trade barriers strengthened global supply chains and fueled a major increase in global trade. In fact, the average rate of tariffs on imports by World Trade Organization members declined from slightly more than 12.74% in 1996 to 8.8% in 2016. Global trade went from $5 trillion in 1996 to $19 trillion in 2013.

We are now moving backward. In its efforts to achieve what it believes to be fair trade, the United States has started trade disputes with several different economies. Its conflict with China is by far the most intense, resulting in a series of additional tariffs. Some people believe that because America is the net buyer and China is the net seller in their trade relationship, China will lose the trade war and ultimately surrender. I believe that's wrong.

Tariffs will hurt both countries. Many tariffed products can't easily be substituted, so they will continue to be purchased — just at higher prices. When a tariff is applied to a particular good, one of three things can happen.

Profits suffer

In some industries, companies will be unwilling or unable to pass the cost onto its customers. This means the company's profits are reduced. For public companies, this of course hurts earnings — and therefore could also impact stock prices.

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