Reply #13: Wake up, we are already in a trade war... [View All]

[idlisambar]

...even if U.S. policymakers don't acknowledge it. Just look at the 2003 trade figures and you will find that America's net imports of manufacturing goods is $550 billion or over 1/4th of total demand for goods.

More to the point, surely you are aware of the fact that many nations in East Asia have been taking rather extreme measures to ensure that the value of their currencies remains low against the dollar. Is there any doubt that this is designed to give their manufactured goods an advantage in the American marketplace? What is your definition of a trade war if this is not a shot across our bow?

As for Smoot-Hawley, why is it that in the long history of the use of tariffs this is the one example that keeps coming up? First of all, Smoot-Hawley played at most a minor role in the Great Depression -- remember that the speculative bubble had already burst a year before the act went into effect....

http://mirrors.korpios.org/resurgent/SmootHawley.htm

Second, people forget that Smoot-Hawley was an attempt to raise tariffs to the level they had been through most of American history to that time -- America's entire rise to economic prominence was behind a solid wall of tariffs. Up until a few years earlier, tariffs were the primary source of revenue for the federal government, but then in the 1910's the constitution was amended in to allow a federal income tax, thus enabling tariff levels to be lowered. Smoot-Hawley may not have been wise in the context of the time, but this is hardly an argument against the use of tariffs in principle. No economic tool should be applied willy-nilly, but smartly applied tariffs have their place.