America’s historical love affair with tariffs has often ended in dismal outcomes, economists caution. Even predating Donald Trump’s “Liberation Day,” the country has introduced high tariffs with a range of inconclusive effects, and sometimes devastating consequences. Douglas Irwin, an economics professor at Dartmouth College, argues that the 21st century is misaligned with the 19th-century tariff mindset of past Presidents that often hampered economic growth.
In the 19th century, tariffs peaked at an average of 50%, supporting a doctrine aimed at safeguarding the developing American economy. Yet, professor Keith Maskus from the University of Colorado asserts that while tariffs had some role in nurturing domestic industry, crucial factors like international labour access and capital influx were more significant in fostering growth.
Access to abundant natural resources—coal, oil, and timber—served as the backbone for America’s industrial boom, according to Christopher Meissner, a professor at UC Davis, explaining that industry size wouldn’t have drastically shifted even with decreased tariffs. Trump’s references to an economic peak from 1870-1913 echo the historical sentiment towards protectionism.
The restrictive tariff laws of the late 19th century, associated with President William McKinley, led to increased imports post-1894, signalling that high tariffs alone do not curtail foreign goods. Harvard’s George Roorbach noted that even with stringent tariffs since the Civil War, import trade grew significantly, often influenced by factors beyond tariff fluctuations.
The Smoot-Hawley Tariff Act of 1930, which tightened tariffs further, notoriously incited a global trade war and worsened the Great Depression—a complex fallout where tariffs were implicated but not solely responsible. Post-World War II, the signing of the GATT agreement in 1947 laid a foundation for lower customs duties and revitalised international trade.
Free trade momentum gathered speed with NAFTA in 1994 and subsequent agreements fuelled by the creation of the World Trade Organization in 1995. Despite Trump’s renewed imposition of tariffs on China during his term, the US trade deficit with the nation persisted, especially after China faced an unforeseen economic slowdown in 2022, proving tariffs didn’t significantly curb imports as Maskus observes.
Economists warn that the U.S. enthusiasm for tariffs often leads to failure rather than success. Historical context reveals that factors beyond tariffs—like resource access and international labour—are crucial for industrial growth. The adverse effects of high tariffs are starkly illustrated during events like the Great Depression, emphasizing the need for nuanced trade policies. Trump’s tariffs against China didn’t curb the growing trade deficit, demonstrating the complexity of trade dynamics.
In summary, the long-standing American inclination towards tariffs has seldom yielded fruitful economic results. History reveals that while tariffs play a role in industry protection, other factors like access to resources and international trade dynamics are far more influential. The tumultuous cycle of tariffs comes with lessons, particularly evident during the Great Depression and beyond, instilling a call for more strategic trade policies moving forward.
Original Source: www.france24.com
