Payne's Perspective: December 9, 2019: Did Tariffs Work?
As we count down to the next round of tariffs potentially going into effect on December 15, 2019, this is a good time to look back on the strategic use of tariffs to bring China to the table and bring fair trade to an arrangement the establishment told us was free trade. It wasn’t free trade; it was just a rigged system that lined the pockets of China and big American businesses able to offshore expenses, including their largest expense: paying American workers.
The experts declared the use of tariffs has never worked and there could be no winners in a trade war. Those observations centered around the results from the Smoot-Hawley Tariff Act legislation passed in 1930 and credited with making the Great Depression worse. In fact, many say the country was amid a garden-variety recession until the tariff war.
I disagree that the nation was in the midst of a mild recession after Black Friday 1929. There is no doubt the global trade war made things worse, but that was almost one hundred years ago, and the dynamics and composition of trade have changed. Nonetheless, the experts laid it all on the line with their fearmongering, and now they continue to use words like “pain” to describe a trade war America is winning.
The Great Depression began in 1929 and got worse after the Smoot-Hawley Tariff Act was implemented. It covered a wide swath of the economy with tariffs climbing as high as 48%.
In addition to global panic (in the 1800s, the four economic depressions were called “panics,” but the term was so harsh experts said a different description could mitigate the impact of the next big decline), the United States endured other issues:
Still, in early 2018, the experts said America would suffer the same consequences of a trade war that Americans suffered in the early 1930s. Look at the table below and consider America is near record-low unemployment, and Black and Hispanic Americans enjoy their best unemployment levels ever.
Our Gross Domestic Product (GDP) has grown nicely, and wages have been surging for more than a decade. The experts were dead wrong.
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