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The Smoot-Hawley Tariff increased tariff rates on over 800 items with an average rate of 59.1 percent, as high as it had ever been. Twelve countries immediately retaliated by placing high tariffs on American imports into their own countries, spawning an international trade war. By March of 1933 international trade by the seventy-five most active trading countries had shrunk from $3 billion/month to less than $.5 billion/month, an 83 percent reduction. This meltdown of world trade imploded the international division of labor and greatly exacerbated the Great Depression.
Think about all this the next time you hear President Trump wax eloquently and lovingly about protectionist tariffs and threaten 200 percent tariffs on country after country, oblivious to the societal train wrecks that protectionist tariffs have caused throughout American history.
Yes, free trade works well if all of the countries engage in it. When some of the countries engage in raw, hard mercantilism, being a free trader has some problems if your own people cannot afford to buy the foreign goods. Yes, mercantilism hurts all involved in it, too.
Tariffs are a necessary threat to China to respond to their fiat paper games and practice of flooding the market with cheap goods from slave labor.
As the world moves to gold/bitcoin settlement, free trade may emerge as advantageous again. However, a nation must always utilize all tools available to hold their trade partners accountable for malfeasance.
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To the extent that other countries use 'slave labor' or heavily subsidized industries...
It just makes the products cheaper for Americans. There is no free lunch in economics.
Somewhere, somehow, sometime those goods are being paid for - and to the extent they are made 'cheaper' overseas just makes them cheaper for Americans, allowing them to buy more and save more for other things.
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That’s right TANSTAAFL! To pay for those cheap goods, people here are put out of work or never get work. The people who consume the slave-labor made goods are supporting slavery. Will they admit that? NO. And they will keep on buying those goods because they are cheap. Like I said TANSTAAFL!!
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Yes, but the thing is that tariffs are the sword that cuts two ways. You may cut your competitor, but you wind up cutting your own throat, too. I guess if the goods are cheap through such tactics as slave labor and state commanded prices, competitors must have some kind of tool to retaliate. Everyone has to know that playing games for trade is not much different from going to war.
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Unfortunately, we're going to be on the losing side of this one.
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I have this terrible feeling about it., too. Because capital can flow across boarders, it is hard to restrict the flow of trade, even with tariffs. Smoot-Hawley was just terrible. Thinking of that, don’t we have another Hawley in the Senate, just now?
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We do, but I never considered whether they're related.
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One never knows! He is conservative and it looks like he supports what Trump is saying. I just wonder if Trump is saying it for positioning or actually means to do it. It would go hand-in-hand with the threats he has made about drugs and immigration. But, being he was an international businessman, he must know that tariffs are horrible on the ol’ economy! This is the problem with Trump, you can’t tell what he is actually thinking, which is probably why he makes good deals for himself.
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I think he really does like tariffs. In his first term, he increased a bunch of tariffs. The impacts were drowned out by the Covid lockdowns, but prices had already started rising.
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Yeah, I wasn’t paying much attention to tariffs at the time, either. I was too busy fighting off the NPCs when I wasn’t wearing a mask! I also wouldn’t stay “locked down” like a good little slave. I was attracting trouble like sh*t attracts flies. I just loved it!!
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I had it fairly easy. No one ever got too carried away with Covid insanity where I lived.
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You must have been living in paradise! I, still to this day, not buy anything from a few retailers that denied me access because of no mask and raised.a ruckus because of it.