‘The Case for Tariffs’ Confuses U.S. History

The Smoot-Hawley Tariff collapsed global trade and helped transform the nascent recession into a decadelong global depression

Letter to The WSJ. 

"In his op-ed “The Case for Tariffs” (March 31), John Michaelson claims that “America thrived with a high-tariff regime in the 19th and early 20th centuries.” He appends a further defense of the Smoot-Hawley Tariff of 1930 by describing it as “high but not exceptional” and unlinked to the Great Depression.

Both assertions are hoary old myths from the protectionist lobby. On the first claim, economic historians have long documented that the strongest industrial growth in the 19th-century U.S. took place in nontraded and nonprotected sectors such as transportation, utilities and communication. By contrast, tariffs in that era became a magnet for Gilded Age corruption at the behest of “infant industries” that never grew up despite the immense public benefits they received.

As for Smoot-Hawley, this protectionist measure imposed an average rate of 59%, placing it well above most 19th-century tariffs and some 20 percentage points higher than its protectionist predecessor, the Fordney-McCumber tariff of 1922. While it didn’t cause the 1929 crash, the levy advanced through Congress as a “stimulus” measure predicated on the same protectionist theories that Mr. Michaelson advocates today. In practice, it collapsed global trade and helped transform the nascent recession into a decadelong global depression. Let’s not repeat these well-documented mistakes.

Phillip W. Magness

The Independent Institute"