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Source? To my knowledge Smoot-Hawley is pretty widely regarded as the worst possible move at the worst possible time. Protectionism doesn't work when domestic purchasing power is already collapsing. Agreed on the rest though.
https://en.wikipedia.org/wiki/Smoot%E2%80%93Hawley_Tariff_Act
yeah maybe my nuance leaned too much to the no side, but I wanted to explain tariffs a bit. Trump tariffs are not protectionism or coercion, they're just stupid.
I was thinking about the protectionism though… like in order for the tariff to work, the us would have to also manufacture the good that is being tariffed. But we don’t produce a lot here…and also even if we did… i guarantee the us business would jack up the prices to be competitive with the foreign price After tariffs and pocket the money. Making the whole thing moot.
The "protectionism" falls flat the moment you consider that the tariffs blanket all goods. If you want to dramatically expand American industry, you don't start by raising the price of steel and raw materials.
Yea no matter how you slice it, there are no good use of tariffs, and if one were to insist, then it would only be like just barley enough to push up the price above parity, and only on very select items. But then if the other country does it back it goes in favor to the nation that is more industrial.
Correct! That's what Cavallo et al found when the Trump administration tariffed China in 2018. US profit margins decreased on both imports AND exports, while China's remained largely unchanged.
According to their analysis, American tariffs hurt Americans more than literally anyone else.
Fun fact, the Trump Administration cited Cavallo et al as supporting evidence for their tariff calculations.
The soybean tariffs, china found other countries quite quickly into counter the tariffs, and they largely abandoned the US of soybeans export
Yeah, sorry to say you were pretty off base friend. Smoot-Hawley didn't start the fire, but it poured fuel all over the flames and locked the firemen out of the building.
Friedman was an advisor to Reagan and Thatcher. He was a libertarian who genuinely believed that economic prosperity hinged almost entirely on just printing more money. His economic theories are all over the place, but even he acknowledges that tariffs generally don't work:
I think you can make a very good argument that the Smoot Hawley tarrifs were the main cause of Great Depression
Most people here love blaming Stalin for more than he is responsible for. The Soviet famine, was a global famine, and its roots are in this Smoot Hawley tariff act. Stalin gets blamed for upholding communist principles instead of submitting to Kulak farmer extortionist pricing. But he was also saddled with US pressure to repay debts with food. The tariff origins are that throughout the world, reciprocal tariffs meant not growing any surplus food, because you couldn't sell it abroad, and then making too much food just made prices lower. A bit of a drought somewhere, and FUBAR.
"both sides" but the two sides are "it was bad" and "it was disastrously bad"