Tariffs

November 10, 2024 |

Trade

The Old Right was a principled band of intellectuals and activists, many of them libertarians, who fought the “industrial regimentation” of the New Deal, and were the first to note that, in America, statism and corporatism are inseparable.

Despite some current claims, however, these writers ardently defended capitalism, including big business and corporations, celebrated the profit motive, and took a strict laissez-faire attitude towards international trade. They loathed tariffs, and saw protectionism as a species of socialist planning.

Humbert H. writes:

Current restrictionist trade theories in the conservative movement, therefore, are not those of the Old Right. Their intellectual legacy is more likely British mercantilism.

The British did pretty well under mercantilism. I have always supported free (meaning from both sides) trade with equally situated countries, like US and Canada, but I love restrictionism and tariffs imposed on countries like China. It's crazy, in my opinion, to have "free trade" with a country that can and routinely does restrict imports, has slave labor, no "social safety net", steals intellectual property in a variety of ways, and can chose to focus on any trade area to bankrupt it's counterparts in a "free" country. The ability to produce a variety of goods is fundamental to the strength of the country. In wars, pandemics, and trade wars the other country starts having domestic capabilities is crucial. When this debate was first discussed in France, restricting the imports of oranges from Spain and Portugal into France was used as an example of what not to do, and that's a poor example compared to importing steel and semiconductors.

Larry Williams comments:

Hamilton's use of tariffs made America great.

Stefan Jovanovich writes:

Hamilton made his living as a private attorney in New York representing the marine insurance companies whose policies required shippers to be "woke" - i.e. perfect observers of their policies' neutrality warranties.

Pamela Van Giessen adds:

Silent Cal Coolidge the Vermonter was also good with tariffs and preferred them to income taxes.

Along with Secretary of the Treasury Andrew Mellon, Coolidge won the passage of three major tax cuts. Using powers delegated to him by the 1922 Fordney–McCumber Tariff, Coolidge kept tariff rates high in order to protect American manufacturing profits and high wages. He blocked passage of the McNary–Haugen Farm Relief Bill, which would have involved the federal government in the persistent farm crisis by raising prices paid to farmers for five crops. The strong economy combined with restrained government spending produced consistent government surpluses, and total federal debt shrank by one quarter during Coolidge's presidency.

Michael Brush responds:

Smoot-Hawley worsened the Great Depression.

Humbert H. cautions:

That's not really a fact, it's a debatable point. There's a range of opinions there from "it caused it" to "it did nothing to worsen it". It's one of those things like "what caused the fall of Rome" that can't be decisively proven.

Stefan Jovanovich offers:

Effective date of Smoot-Hawley Tariff: June 17, 1930
Tariff collections:
Fiscal Year 1931: $378,354,005.05
Fiscal Year 1932: $327,754,969.45
Fiscal Year 1933: $250,750,251.27
Total tax collections by Treasury:
Fiscal Year 1931: $2,118,092,899.01
Fiscal Year 1932: $2,118,092,899.01
Fiscal Year 1933: $2,576,530,202.00

Pamela Van Giessen writes:

Amity Shlaes goes into detail about how the depression was extended (or recovery didn’t come) in The Forgotten Man. She attributes the worsening of the depression, especially in the late ‘30s, to a combination of government interventions that included the Smoot-Hawley tariff, government (and union) demands to keep wages high, banking regulation, over-regulation, and FDR’s new deal, among other government interventions. In short, there doesn’t seem to be just one cause though it seems reasonable to blame each of the interventions.

Art Cooper adds:

I also found Murray Rothbard's America's Great Depression to have worthwhile insights.

Comments

1 Comment so far

David Boland on November 11, 2024 11:28 am
Trade is based on trust and I fear that trust with some trade partners has been undermined. A big problem seems to be the recourse for such grievances. If one faces unfair competition like dumping, do they go to the WTO, hire counsel, then wait four years for a resolution? If online vendors can be flooded with knockoffs of new or patented products then how can small businesses compete without protection of their ingenuity? When a company can exploit de minimis shipping and Americans love of shopping for cheap stuff, is wellbeing raised or are we merely shifting a larger portion of our retail dollar to avoid paying high U.S. retail wages and rents?

Tariffs offer a solution for a harmed entity to protect itself and well-capitalized ones to onshore. It also invites foreign companies to invest in the U.S. hence Toyota’s huge manufacturing presence in Indiana and Kentucky and BMW Spartanburg plant.

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