Depression-era trade policy
By David A. Andelman for CNN Business Perspectives
Updated 12:30 PM ET, Fri August 30, 2019
... last month, the United States threatened tariffs on $4 billion worth of EU goods, and Trump has continued to threaten tariffs on European auto imports. Meanwhile, Germany's economy declined in the second quarter of 2019, raising fears of a recession in what had been the motor economy of Europe — and that's before any American tariffs might kick in.
US allies will need to come to grips with the United States' changing leadership role in world trade. But this isn't the first time the United States has championed protectionism.
After its intervention in World War I, the United States embraced an isolationist tilt and enacted the Smoot-Hawley Tariff Act in 1930. With some rates as high as 80%, it was narrowly the second-highest tariff in American industry and slapped tariffs on all countries exporting goods to the United States. Senator Reed Smoot of Iowa and Congressman Willis C. Hawley of Oregon thought they were doing just the right thing by protecting American industry and American jobs. But the results were disastrous. The act has been credited with making the Great Depression even more devastating.
In many respects, the Smoot-Hawley levies were far more damaging to the US and global economy than any tariffs that had been enacted before. Two years after Smoot-Hawley was enacted, US imports fell 40% while unemployment increased. Nations around the world — but particularly in the motor economies of Europe — began throwing up their own protective tariff shields. Canada, for instance, slapped additional tariffs on US eggs, and exports fell from 919,000 dozen in 1929 to 7,900 dozen in 1932.
As the 1930s wore on, global financial paralysis only intensified ...
https://www.cnn.com/2019/08/30/perspectives/smoot-hawley-tariff-act-trump-trade/index.html