Trump and Tariffs

Pete's BLOG: Today is Tuesday, March 29, 2016. I've walked 40,5 miles and weigh 165.8 pounds.

QUOTE from James Barber: "Age is inevitable but growing old is optional."

My topic today is about DONALD TRUMP and his intention to raise tariffs.

While watching the GOP Comedy Shows (aka debates) my mind keeps coming up with questions. Most all the GOP candidates make me scratch my head but Donald Trump makes me scratch the most. He needs to read some history books so he doesn't repeat the same mistakes the GOP made many years ago. What I'm talking about is his idea of imposing a 45% tariff on goods coming from China and other trading partners. Here is what happened when we tried something similar from 1929 to 1934.

On June 30, 1930, President Hoover signed into law the Smoot-Hawley Act. It had been debated for all of 1929 and passed the Congress when the GOP majority voted overwhelmingly in favor of it. Smoot was a GOP Senator from Utah and Hawley was GOP representative from Oregon. What the new law did was impose high tariffs (aka taxes) on thousands of goods imported into the U.S. - it's goal was to protect American jobs and American farmers from foreign competition. It is the same thing that Donnie is proposing today.

I guess Smoot and Hawley were not smart enough to figure out that if we imposed higher tariffs on their goods they would retaliate and do the same to us. That is exactly what happened. Trading partners like Canada, Britain, France, Germany and many others increased their tariffs on American goods. The result was that from 1929 to 1934 U.S. IMPORTS DECREASED 66%, while U.S. EXPORTS DECREASED by 61% in the same time period - costing us billions of dollars and made unemployment rise to 25%. The worldwide "tariff war" decreased world trade by some 66% from 1929 to 1934.

So Donnie, I would suggest you do some studying about raising tariffs. The results were disastrous in the 1930s. And Donnie there are going to be a lot of people pissed- off at you if they have to pay 45% more for the many goods Walmart imports from China and other Asian countries.

In fairness to President Hoover he was against the Smoot-Hawley bill - he favored higher tariffs on agricultural goods but not on industrial goods. - but the bill had both. Hoover actually called it "vicious, extortionate and obnoxious." Over 1,000 economists asked Hoover to veto it. Henry Ford called the bill "an economic stupidity" and begged Hoover to veto it. The CEO of J.P. Morgan called it "asinine." But Hoover yielded to pressure from the Republicans in Congress and from business leaders and signed the bill on June 30, 1930. When he signed he had already received "protest notes" from 23 of our trading partners and all 23 threatened to raise their tariffs if he signed it - and they did. I think the results would be the same this time - so Donnie, you better give it some serious thought.

The Smoot-Hawley law was not the only cause of the Great Depression. But most economists agree that it was counterproductive and contributed to the depth and length of the Depression. And most they agree it was responsible for cutting our imports and exports by more than half.