How Protectionist Became An Insult
Truth About Trade & Technology
Tuesday, June 22, 2010
“The Smoot-Hawley tariff, conceived as a Republican ploy to gain the farm vote in the 1928 election, was a bad idea from the start. A tariff could not help farmers cope with low prices because most of them depended on exports.”
The Smoot-Hawley Tariff Act which increased tariffs on imports to the U.S. was put into law in June 1930 by the Republican congress under Hoover. Rates on dutiable imports rose to their highest levels in over 100 years. Increases of 50 percent were common and some rates went up 100 percent. Sepculations are that the Smoot-Hawley tariff spawned protectionism abroad (and the Great Depression?).
On the upside, the long term the memory of the Smoot-Hawley tariff has kept Americans committed to a free-trade policy. For more than 60 years, a guiding principle of U.S. international economic policy has been that tariffs and other trade barriers should be reduced, that trade wars must be avoided at all costs, and that the best way to achieve those goals is through multilateral negotiations.
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And for a bit more… “Smoot-Hawley is the Economists’ Munich”?” by Mark Thoma – – – quoting Thoma “Yes, the Smoot-Hawley tariff is widely understood to have been asinine, but not because protectionism is everywhere and always wrong–rather, because protectionism in the specific context of the late 1920s, with an awful lot of money owing internationally and a number of countries desperately needing to trade with the US, was wrong.” http://feedproxy.google.com/~r/EconomistsView/~3/Eb4GnxOpY-c/smoothawley-is-t…