Kerby Anderson
Last week the president launched tariffs and a trade war. Nearly everyone has an opinion about tariffs, but it is worth looking back at an article written in 1985. Why should we consult an essay that is 40 years old? We should pay attention to it because it’s talking about something that happened nearly a century ago.
Ed Yardeni provided a reprint of his article, “The Protectionist Road to Depression.” He believes “the single more catastrophic cause of the Great Depression was the Smoot-Hawley Tariff of June 1930.” Yes, the stock market crash in October 1929 was significant, and so were other economic events at the time. But if you look at his graphs about what happened after passage of the Smoot-Hawley Tariff, you can see his point.
A little history might be in order. Representative Willis Hawley from Oregon introduced a tariff bill in 1929. Senator Reed Smoot of Utah introduced his version of a tariff bill that was finally passed in 1930. A conference bill was later passed. As critics predicted, international trade retaliation came from numerous countries. Soon world trade collapsed as he shows in one of his exhibits.
He wrote his essay because he was seeing protectionist sentiments “spreading at an alarming rate.” One bill (at the time) would impose a 25% tax on all imports from Japan, South Korea, Taiwan, and Brazil. Sound familiar? The countries targeted might have changed, but the percentages proposed are the same.
Will the current tariffs bring jobs back to this country? On my radio program, I read the long list of companies who say they will invest in America. Yes, there is some good news with the tariff announcement, but there is also concern. That’s why learning a bit of economic history might be helpful.
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Penna Dexter