History does not repeat. But it does rhyme.
> The Legacy of the Smoot-Hawley Tariff Act
> The Smoot-Hawley Tariff Act was a grave error for U.S. trade policy. As the United States slid into depression, the act represented a desperation move by Congress and President Hoover. Since then, presidents have regarded free trade as the rule rather than the exception. Economist Douglas A. irwin discusses the Smoot-Hawley Act and its legacy.
https://youtu.be/R3zvJe3Koyw
Just learned about it, so I was curious about the state of the industry.
Edit: Awesome,thanks for the Great Question Tag.
I've noticed a lot of growing negative sentiment to the President Trump tariffs on various countries namely, China. A lot of investors have referenced the Smoot–Hawley Tariff Act.
Basically President Herbert Hoover protectionist policy was to help the American worker, sounds familiar? Henry Ford pleaded with Hoover to veto the bill, much like Nike, Adidas pleading with President Trump. He signed into law tariffs on Europe which pissed off the world, slowed down trade, and worsened the Great Depression. Only difference between President Hoover and President Trump? President Hoover actually had concerns over tariffs, unlike Trump.
Do the bears have a valid case when they state that these Trump tariffs could cause history to repeat itself like it did then?
Are there any similarities between the Smoot–Hawley Tariff Act and the current trade wars? Are we just repeating the same mistakes or is there some reason that this time a protectionist trade policy is warranted and will actually benefit the US economy?
How did Smoot Hawley work? How popular was it? How did it compare to the steel tariffs Bush passed?
Edit: SHOULD NOT EMPLOY Tariffs again.
https://www.theonion.com/dianne-feinstein-considers-eliminating-filibuster-over-1846993952
It doesn’t seem to make sense from a microeconomic standpoint. But then again I’m a senior in high school taking AP micro, so I’m not as well versed in economic theory as many of you.
Economist/former-Nixon-speech-writer/humorist/actor Ben Stein was asked to improvise something that would bore students to tears for the 1980s movie Ferris Bueller's Day Off. In an Oscar-worthy performance Stein delivered, in his characteristic droning voice, an off-the-cuff lecture about the 1928 Smoot-Hawley act that would put anyone to sleep.
The Smoot-Hawley Act initially imposed steep tariffs on agricultural products threatened by the advent of mechanization, but soon ballooned to include some 800 other products as producers demanded inclusion. The stock market then, as now, was ascendant, the economy was booming, Happy Days were there forever. The bubble was bound to burst, but Smoot-Hawley exploded it, sent it so precipitously over the edge that any chance of a soft landing was crushed on the jagged rocks of manufactured economic inevitability.
Modern day economists now cite Smoot-Hawley as examplar of the perils of protectionism, and more than a thousand of them have signed a petition urging Trump to avoid the unintended consequences (the great depression, eg) of just such protectionism. Some even urge Trump to watch the movie, knowing he doesn't read. It's come down to this: The best hope for the world to avoid global depression is that the President of the United States of America watch a teen movie.
Maybe Trump did watch the movie. Trump's twitter-storm announcing more sanctions on China (and other countries) has been replaced by a 'hold'. I don't follow daily Trump-tweets enough to know if his 'hold' still holds, but absent catastrophe, apparently so, for the moment.
Most instructive in this Trump-China War of Tweets is the tale of just one ship among many caught in the middle.
On March 18, the bulk carrier RB Eden left Corpus Christi, Texas, loaded with 70,223 tonnes of sorghum, bound for Shanghai. The Eden skirted the broad north coast of South America, set a southeasterly course across the Atlantic to the southern tip of Africa, rounded the oft-brutal Cape of Good Hope passage, headed northeasterly. It then got a message about the Trump/China twitter-storm announcing Chinese retaliation against the very crop it carried. The good ship RB Eden then executed a 1.6 million dollar mid-ocean turnaround, retraced its route hundreds of miles to the Cape, re-rounded that treacherous passage,
... keep reading on reddit ➡The Smoot-Hawley Act limited international trade so the debt crisis wouldn't get any worse. Hoover probably signed the bill because he knew a socialist would win the next election and prolong the Great Depression, and that's exactly what happened. You see, FDR's New Deal only made the Great Depression worse, because with more employees than usual, businesses obviously paid people less, since they were in a lot of trouble too. Small companies were also obviously sued a lot more, causing them to go bankrupt (if they weren't already bankrupt before 1933). Socialism bad, capitalism good.
