Trump’s Tariff Plan

The Great Depression. Unemployed men queued outside a soup kitchen opened in Chicago by Al Capone. The storefront sign reads ‘Free Soup, Coffee and Doughnuts for the Unemployed.’ Chicago, 1930s (Newscom TagID: evhistorypix027753.jpg) [Photo via Newscom]
I began to take a look at Donald Trump’s positions and discuss each of them individually, but the fact is, his positions change so much it’s hard to keep track. Additionally, every time I read and re-read his platform on his campaign page, he adds more and more rhetoric that is literally lifted from his opponents – stances and objectives that he never dreamed up, and have sometimes contradicted him. Legitimately word-for-word on issues he was previously ignorant of in previous debates and speeches.

His online presence is certainly not in step with his persona in public, and I’m really not sure what we would get, ever. However, on tonight’s debate, he discussed his 45% tariff plan on imports and for foreign trade. What he doesn’t seem to understand, and what Senator Ted Cruz quickly and adeptly (as an experience government official would be able to) pointed out was that tariffs are passed on to the people. I mean, as a businessman, Trump should understand this – it’s exactly what businesses do to taxes. It’s simple economics.

As a businessman who exploits loopholes and puts people last and himself first, as he readily admitted to in tonight’s debate, Trump should understand the basic failure of this system, and how it would not work outside of his fuzzy land of making very, very great deals, and having many, many smart negotiations to make America great again. I am actually beginning to question his business acumen, really, for the complete ignorance he expresses on basic economics. Who really runs his show? It’s not him, clearly.

Anyway, back ot the tariff thing. I’m no economist either (although I do recall some basic social studies and civics classes trom middle school on through college that discuss the history of this country, both socially, militarily, and economically), but Trump’s trade “protectionism” has been tried before in the U.S – and it failed miserably. It didn’t cause the great depression, but it certainly may have extended it. Being, though, I am not an economist, I’ll let the experts explain precisely what will happen with Trump’s tariff plan:

The Smoot-Hawley Tariff Act of June 1930 raised U.S. tariffs to historically high levels. The original intention behind the legislation was to increase the protection afforded domestic farmers against foreign agricultural imports. Massive expansion in the agricultural production sector outside of Europe during World War I led, with the post-war recovery of European producers, to massive agricultural overproduction during the 1920s. This in turn led to declining farm prices during the second half of the decade. During the 1928 election campaign, Republican presidential candidate Herbert Hoover pledged to help the beleaguered farmer by, among other things, raising tariff levels on agricultural products. But once the tariff schedule revision process got started, it proved impossible to stop. Calls for increased protection flooded in from industrial sector special interest groups, and soon a bill meant to provide relief for farmers became a means to raise tariffs in all sectors of the economy. When the dust had settled, Congress had agreed to tariff levels that exceeded the already high rates established by the 1922 Fordney-McCumber Act and represented among the most protectionist tariffs in U.S. history.

The Smoot-Hawley Tariff was more a consequence of the onset of the Great Depression than an initial cause. But while the tariff might not have caused the Depression, it certainly did not make it any better. It provoked a storm of foreign retaliatory measures and came to stand as a symbol of the “beggar-thy-neighbor” policies (policies designed to improve one’s own lot at the expense of that of others) of the 1930s. Such policies contributed to a drastic decline in international trade. For example, U.S. imports from Europe declined from a 1929 high of $1,334 million to just $390 million in 1932, while U.S. exports to Europe fell from $2,341 million in 1929 to $784 million in 1932. Overall, world trade declined by some 66% between 1929 and 1934. More generally, Smoot-Hawley did nothing to foster trust and cooperation among nations in either the political or economic realm during a perilous era in international relations.

The Smoot-Hawley tariff represents the high-water mark of U.S. protectionism in the 20th century. Thereafter, beginning with the 1934 Reciprocal Trade Agreements Act, American commercial policy generally emphasized trade liberalization over protectionism. The United States generally assumed the mantle of champion of freer international trade, as evidenced by its support for the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), and the World Trade Organization (WTO).

Additional Reading:
Barry Eichengreen. “The Political Economy of the Smoot-Hawley Tariff,” Research in Economic History, 12 (1989), pp. 1-43.
Douglas A. Irwin. “From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s,” in Michael D. Bordo, Claudia Goldin, and Eugene N. White, Editors, The Defining Moment: The Great Depression and the American Economy in the Twentieth Century(Chicago: University of Chicago Press, 1998).
Charles P. Kindleberger. The World in Depression, 1929-1939 (Berkeley and Los Angeles: University of California Press, 1973).
Peter Temin. Lessons from the Great Depression: The Lionel Robbins Lectures for 1989 (Cambridge, Massachusetts: MIT Press, 1989).

I remember this from middle school. Trump is discussing plans that, historically, have led to failure. I am seriously beginning to question his grasp on basic governmental function – clearly he has no understanding of it. Clearly he has no understanding of how this country is built (and I did take offense to his flippant regard to this “random” number that someone decided as far as how many delegates are needed – the GOD-DAMN FOUNDING FATHERS DECIDED THAT, DICK). Sorry – but seriously, don’t attack our basic form of government.

This man is literally the most out-of-touch Presidential candidate that we’ve ever seen. Out of touch with general society, out of touch with American people, and out of touch with the basic functions of government. That’s dangerous. He has never lived in a world where common realities exist. I honestly don’t know that he understands basic business principle or economics, and he clearly doesn’t understand American Civics. The best he can do is yell loudly and act like, basically – and I’m sorry if Trump supporters are reading this, but the truth hurts at times – the lowest common denominator in this country.

And they’re getting out in droves to vote for him.

Anyway, angryish/annoyed rant over. Just recognize that Trump’s big talk is rarely backed by nothing substantial, and the plans he actually lays out are either stolen from other candidates, or things that have already been tried and have failed. Because the country isn’t a business, Mr. Trump. It’s much more than that, and it will ALWAYS be much more than that.


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