One man’s opinion: Trade wars

The American people have long demonstrated antipathy towards tariffs and duty fees In Boston on December in response to increasing tariffs on tea under the monopoly control of Great Britain American colonists that were disguised as native Americans boarded the Dartmouth a British ship owned by the East India Tea company and dumped chests with tea imported from China into Boston Harbor The self-labeled Sons of Liberty would later proclaim No taxation without representation Later President Theodore Teddy Roosevelt broke up a number of large monopoly industries and trusts while substantially reducing tariffs which were a large source of federal tax revenue at the time and in part setting the stage for the creation and implementation of the federal income tax in Post World War I the costs of the great war in lives and administration treasuries caused various nations of the world to consider nationalist and protectionist policies in part to isolate themselves in the event of another future global conflict The United States was among those countries considering such an internal facing economic turn The League of Nations a precursor to the United Nations was formed in in Paris and headquartered in Geneva Switzerland to promote world peace President Woodrow Wilson was a primary advocate for the creation of the League to maintain peace though the U S never became a member Wilson was a Democrat and the Republican Party of that day opposed the growing trend of free pact as well as the League of Nations Thanks in part to the Industrial Revolution the U S had a strong arrangement surplus while there were beliefs that foreign arrangement was stealing American jobs as the country headed into a recession in In October of the stock area crashed rippling across global finance markets U S Senator Reed Smoot a Morman prophet businessman and Chair of the Senate Finance Committee proposed a series of high tariffs and duties on a list of durable goods being imported into the United States Working with House Solutions and Means Chairman Congressman Willis Hawley the pair crafted the Smoot-Hawley Tariffs Act of which went into effect in June of that year Duties on particular popular imports were quadrupled As the bill headed to President Herbert Hoover s desk for signature nearly of the nation s leading economists wrote a letter asking the President not to sign or veto the bill Though Hoover had previously been critical of the bill and tariffs in general he signed the bill into law beginning in effect a global arrangement war An outraged Canada placed a tariff of roughly percent on American imports The UK France and Germany instantly followed suit either advancing their own internal manufacturing quota to replace American imports or locating alternative markets Global commerce dried up much of the world s shipping fleet was mothballed and new ship orders were cancelled This in turn affected numerous other U S profit centers and industries including steel production fishing farming and manufacturing of all kinds Along with the sector crash and present recession the U S market slid into the Great Depression Incoming President Franklin Delano Roosevelt faced economic meltdown and catastrophe Speaking of the Smoot-Hawley Tariff Act he explained that the U S had compelled the world to build tariff fences so high that world commerce is decreasing to a vanishing point From to U S exports plummeted by percent imports declined by percent The unemployment rate tripled from eight percent to percent America s aggregate wealth was nearly cut in half Though the negative impacts of the tariff hikes across allies and enemies alike were almost immediate repairing this damage would take decades both in terms of statecraft and rebuilding trust and U S pact markets Until the U S joined the Allies in fighting World War II when France was occupied by German forces and London was being continually shelled the U S had alienated itself from much of the rest of the world While I do not believe that the more immediate and ever changing Trump Administration tariffs duties and taxes will have as immediate or drastic an impact if the deal maker-in-chief cannot produce results fast the tariffs will become a net drag on the U S business activity and consumer spending And U S exports markets will shrink Time and again in our nation we have been able to find the best path ahead in part by looking at what did not work well in our past The input is still there this point is not yet s moot The post One man s opinion Arrangement wars appeared first on Rough Draft Atlanta