Monday, July 29, 2024

The historical downside of tariffs

See The Antigrowth Agendas of Harris and Trump by Mickey D. Levy. He is a visiting fellow at the Hoover Institution. Excerpts: 

"Every 100 years or so, the protectionist wing of the Republican Party pushes through significantly higher tariffs. The outcome is never good. In 1930, at the start of the Great Depression, Congress enacted the Smoot-Hawley tariffs. The stated purpose was to protect U.S. industries and absorb the excesses that resulted from productivity advances in the 1920s. The tariffs aggravated the dramatic global depression and were repealed two years later. The Tariff of 1828—the so-called Tariff of Abominations, which raised tariffs by up to 50%—accentuated the divide between the industrialized North and the agricultural South and was largely reversed three years later."

"the benefits of any shift are more than offset by inefficiencies, the higher costs to domestic consumers, and the foreign retaliation that usually occurs. Frequently the result is slower global trade"

"In 2018 Mr. Trump imposed tariffs of 25% on steel imports and 10% on aluminum imports, declaring, “Trade wars are good and easy to win.” China retaliated in various ways and Mr. Trump’s promise that manufacturing jobs would suddenly flood back to the U.S. proved worthless. Global trade and production declined and U.S. manufacturing jobs flattened. Tariffs violate the simple but sound law of comparative advantage."

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