Staff Reports
Donald Trump’s latest foray into tariff proposals has sent shockwaves through the circles of trade globalists faster than a dog chasing its tail. With suggestions ranging from a modest 10 percent on all imports to a staggering 60 percent on Chinese goods, it seems the mere mention of tariffs is enough to throw the economic chicken littles into a tailspin of panic. According to them, America is on the verge of an economic apocalypse, with prices skyrocketing and retaliatory measures that would make even a mild-mannered economist blush. However, this fearmongering doesn’t hold water when scrutinized.
The critics would have you believe that tariffs equal instant inflation, sending consumer prices into a frenzy and leaving everyday Americans scrambling for their wallets. In reality, during the 2018-2019 U.S.-China trade debacle, companies absorbed a significant portion of tariff costs rather than passing them onto consumers. In competitive industries, businesses prioritize keeping customers over protecting thin profit margins. Higher prices might push consumers to explore alternatives, which means businesses often find it more advantageous to keep costs down. Who knew the free market could be so resilient?
Breitbart Business Digest: The Smoot-Hawley Myth and the Real Stakes of Trump‘s Tariff Proposals https://t.co/91q9MQw8ZO via @BreitbartNews
— John Carney (@carney) October 4, 2024
The tired old argument about the Smoot-Hawley Tariff Act of 1930 being the ultimate bogeyman in this narrative is really starting to wear thin. By the time Smoot-Hawley haunted the economy in June of 1930, the nation was already knee-deep in the fallout from the 1929 stock market crash. The wiser economists among us—like Milton Friedman—pin the blame for the ensuing Great Depression not on tariffs but on the Federal Reserve’s decision to choke the money supply. Smoot-Hawley raised duties on a paltry few imported goods, likely reducing imports by only a measly one or two percent. The far more significant factors influencing the trade-challenged economy were, shockingly, economic mismanagement and a deflationary spiral.
Of course, the notion that the world would have played nicely in the sandbox if the U.S. hadn’t been the one to toss sand into its eyes generates more eye rolls than applause. Many nations were already on a path toward implementing their tariffs, with or without Smoot-Hawley. Countries like Canada were grappling with their agricultural crises during the Depression, which forced them to protect their farmers regardless of American policies. The reality is that nations across the globe were primarily responding to their individual economic circumstances rather than merely reflecting the American approach.
This brings to light a crucial point: the collapse of trade in the 1930s had far more complexity than just tariffs; it was driven by monetary contraction, soaring global debt, and pervasive deflation. Tariffs may make for convenient scapegoats, but they were merely a side dish at the larger economic buffet. Trump’s tariff proposals are a strategic necessity aimed at rectifying these long-standing trade imbalances and protecting American industries from the unfair practices that have been ignored for too long.
Trump’s tariff strategy, magnified by percentages that might send economists into a tizzy, isn’t setting the stage for a new Great Depression. Instead, these tariffs represent a proactive step toward a fairer global trading system. In a world where rivals like China continue to exploit weaknesses in the trading game, tariffs are less about retribution and more about strategic necessity. They are akin to a defensive play designed to secure America’s economic future. It’s high time to cut through the blurred lines of historical comparisons and recognize that contemporary challenges require modern solutions.
