Qingdao, China – November 8, 2023 – Container ships often enter and graduate from the Chianwan container station in the Qingdao port in Qingdao, Shandong Province, China, November 8, 2023.
Norfuto Norfuto Gety pictures
The trade war is a fermentation – and if history is any evidence, the American economy may not be very happy with it.
On Saturday, President Donald Trump imposed an additional tariff on Saturday on all imports from China that start on Tuesday. In response, China Revenge with his definitions Up to 15 % on the United States' chosen imports, starting from February 10.
Experts believe this is just a preliminary sulfos for a wider trade war between the two countries.
Meanwhile, the United States On the edge of the abyss From a commercial spit with Canada and Mexico. Trump also threatened to impose a tariff on the European Union – and if that happened, the nations pledged revenge.
“I will never support the idea of fighting the allies,” “Danish Prime Minister Miti Frederksen He said the two. “But of course, if the United States sets difficult conditions on Europe, we need a strong and strong response.”
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The current runner bears many similarities with a previous episode in the history of the United States-the 1930 tariff law-which sparked a comprehensive trade war and the exacerbation of the Great Depression, according to economic historians.
The law, known as the SMOOOT-HWLEY tariff, was “one of the most controversial tariffs carried out by Congress”, Doug Irwin, a professor of economics at Dartmouth College and the former president of the Association of Economic History, books In 2020.
This was also the last situation of a trade war that included the United States, before the first period of Trump.
Mitchner said Smoot-Hwley raised “the mother of all commercial wars.”
What was the SMOOT-HWLEY tariff?
Representative Willis Holie, R-ERE. , The left, and the Senator Red Smoot, R-r-r-in April 1929, shortly before the SMOOOT-HWLEY Law was approved.
Source: Congress Library
If the Smoot-Hwley tariff looks mysteriously familiar, it may be thanks to the pop culture: “Ferris Bueller's Day Off” for 1986 has an unforgettable scene in high school drone with a monotony about customs tariffs.
Among the goals of SMOOT-HWLY was protection Mitchner said that American farmers, who expanded agricultural production during World War II but suffered after the war with the return of European production online and prices collapsed.
However, Congress The range expanded From the definitions to a large extent, it extends beyond agriculture to all sectors of the economy. The law obtained his name from his chief supporters in Congress: Representative Willis Holie from Oregon, Chairman of the Committee, Roads and Writing of Tax, and Senator Reed Smot from Utah, who chaired the Senate Finance Committee.
Smoot-Hawley said it was “wide”, and the tariffs were placed on about 25 % of all the goods imported to the United States-about 800 to 900 different types of goods.
If the United States sets difficult conditions on Europe, we need a strong and strong response.
Metty Friedrixen
Prime Minister of Denmark
President Herbert Hoover, who was running for the office on a platform to help farmers suffering from a preventive tariff, signed the law in June 1930, ignoring the petition. Signed by more than 1000 economists He is asked to veto against the bill.
Mitchner said that the law raised the applicable customs tariff – the customs tariff for the goods subject to import duties – by about 6 degrees Celsius, on average.
Although this may not seem much, these duties have sparked a trade war with major commercial partners in the United States, which may have been “the most important repercussions”, Irwin wrote from Dartmouth College.
How SMOOT-HWLY raised a trade war?
Erwin said Smoot-HWLY raised the average tariff on the suspects to 47 % of 40 %. He added that the contraction of the depression era helped in the end to push this average to almost 60 % in 1932.
Mitchner said that nine countries – Argentina, Australia, Canada, Cuba, France, Italy, Mexico, Spain and Switzerland – imposed a retaliatory tariff specifically to American products.
“Canada, which was dependent on the American market, was almost immediately and imposed a large tariff enough to put a large condemnation in American exports,” Irwin wrote.
“The response against the response” to the targeted tariffs is the distinctive feature of the trade war.
Irwin wrote that other countries formed commercial blocs that excluded the United States. Ultimately, 35 government protests presented against Smot Holie, said Michner.
Economists said the result: global trade collapsed, which exacerbated the great depression, which was the worst economic shrinkage in the history of the United States. Michnar said that US exports of state decline decreased by about 28 % to 32 %. Moreover, the nations that need SMOOT-HWLY It also decreased Their American imports are 15 % to 23 %.
It was “among the most disastrous actions in the history of Congress,” according to my historical summary On the American Senate website.
Definitions leading to Trump
Scott Lincum, Vice President of the General Economy at the Stifel Center for Commercial Policy at the Kato Institute, said the path that reflected the United States reflected after realizing how definitions could feed foreign policy issues and contribute to global wars.
Lincicome said the global economy “is similar to complex dance.” “The definitions are just a kind of throwing the switching key in that dance.”
The average customs tariff for importable imports from about 59 % in 1932 to about 13 % in 1950, and decreased less analysis By the Kato Institute.
Meanwhile, the average tariff rate in all imports – which includes products that are not subject to tariffs – decreased from about 20 % in 1933 to less than 2 % from 2000 to 2019.
Experts say that while the presidents who preceded Trump, as well as President Joe Biden, used customs tariffs, they were enacted for various reasons and in different sizes.
These were not justifications used for definitions in the past.
Pret House
Professor of Professional Practice at the Department of Economics at Colombia College of Business
Historically, “” US administrations were usually protest when the local industry complained of competition from foreign suppliers, “said Brett House, professor of professional practice in the Department of Economics at Colombia College of Business.
For example, during the second administration of President Barack Obama in 2013, the International Trade Committee issued “duties to dumping”, or a form of tariffs, specifically on washing machines from Mexico and South Korea.
After years, during his first term, Trump issued a tariff on washing machines as well, but it was universal rather than narrowing it to specific countries. At the same time, Trump imposed another tariff, such as costs on steel and aluminum.
Irwin told CNBC that other presidents, including George W. Bush, Ronald Reagan and Richard Nixon, had put a tariff on steel, which is a historical automatic industry for federal protection. But Trump's second state is unique in that it uses customs tariffs in a “wide brush” way – applied to all the goods of the nation, for example – something “that a president has not done in modern memory.”
In addition, “what distinguishes Trump's tariff policy is the supposed justification for that, which is an attempt to discipline Canada and Mexico to flow illegal drugs and people who do not have documents across their borders,” said House.
“This logic has not been used for definitions in the past.”
Will he repeat history?
Economists have said that the dispute caused by SMOOT-HWLY is similar to the commercial environment today in a few ways-including prominent commercial partners who are calling for revenge on the United States policy.
For example, before Access to 11 o'clock deals To delay 25 % of customs tariffs for one month, officials in Canada and Mexico pledge To fight.
Canadian President Justin Trudeau warned on Saturday that his country It will be implemented A 25 % tariff on about 107 billion dollars in American goods. they It included Duties on meat, dairy products, products and other food products, beer, wine and spirits.
China said it will impose a 15 % tariff on charcoal and liquefied natural gas imports from the United States, 10 % on American crude oil, agricultural machinery and some cars.
“We are already witnessing a commercial war that reveals,” Irwin told CNBC.
The proposed definitions of Canada, China and Mexico are 0.4 percentage points and increase taxes on Americans by 1.1 trillion dollars between 2025 and 2034, before calculating any revenge, according to L. appreciation By the Tax Corporation.
Of course, “whether it becomes a commercial war and the repetition of history in the fact that the snow-hawley depends on the response of our commercial partners and/or whether Trump is deceived to get a kind of concession,” Mitchner wrote in one of the e-mail.
