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EU threatens Great Depression over Smoot-Hawley Tariff Act

February 3, 2009

The EU has increased its pressure on the US to reconsider the “Buy American” clause in the $800bn (£567bn) economic recovery package now before Congress. The clause seeks to ensure that only US iron, steel and manufactured goods are used in projects funded by the bill. The EU and Canadian ambassadors to Washington have already warned that the clause could promote protectionism and trigger retaliatory moves. According to the BBC This is EXACTLY what contributed to the Great Depression.

The Smoot-Hawley Tariff Act (sometimes known as the Hawley-Smoot Tariff Act) was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. In the opinion of some economists, the Smoot-Hawley Act was a catalyst for the severe reduction in U.S.-European trade from its high in 1929 to its depressed levels of 1932 that accompanied the start of the Great Depression. Wikpedia

You can’t start raising protectionist laws now… not with the threat of retaliation looming. It will virtually cut off our overseas markets. Who’s the idiot that thought this was a good idea when historical references point to the polar opposite.

If this passes, this will be a common sight throughout the United States

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Written by TheFounder · Filed Under Advertising Agency News 


Comments

  • Hilary Smith

    If instead of “Buy American” we imposed “Buy Democracy” restrictions on the use of the stimulus, that would be alright with me. Our quality of life suffers when we try to compete with undemocratic countries using unethical labor practices. It would be fine with me if the stimulus money were spent on goods produced in democratic nations. We should be careful not to drive our democratic allies into the arms of the Chinese. And we definitely need to put the kibosh on the flood of cheap Chinese imports. Also, what were our exports as a percentage of GDP during Smoot-Hawley versus our exports as a percentage of GDP now? If our exports are way down now, the Buy American protection might not have the same effect that Smoot-Hawley had.

  • Hilary Smith

    If instead of “Buy American” we imposed “Buy Democracy” restrictions on the use of the stimulus, that would be alright with me. Our quality of life suffers when we try to compete with undemocratic countries using unethical labor practices. It would be fine with me if the stimulus money were spent on goods produced in democratic nations. We should be careful not to drive our democratic allies into the arms of the Chinese. And we definitely need to put the kibosh on the flood of cheap Chinese imports. Also, what were our exports as a percentage of GDP during Smoot-Hawley versus our exports as a percentage of GDP now? If our exports are way down now, the Buy American protection might not have the same effect that Smoot-Hawley had.

  • http://www.adirondackbasecamp.com/ TourPro

    Whenever government gets involved with economic choice, only bad things can happen. Please let me decide where to spend my money. At the same time, those with ethical issues should simply boycott those products that don’t fit with their lifestyles.

    “Buy American” is such a simplistic notion in a world economy.

  • http://www.adirondackbasecamp.com TourPro

    Whenever government gets involved with economic choice, only bad things can happen. Please let me decide where to spend my money. At the same time, those with ethical issues should simply boycott those products that don’t fit with their lifestyles.

    “Buy American” is such a simplistic notion in a world economy.

  • Marc

    Exports accounted for only 7% of GDP when Smoot-Hawley was passed. After passage, they dropped only to 5.5%. Smoot-Hawley was hardly the impetus for the Great Depression. Too, it is virtually impossible to state Smoot-Hawley accounted for the drop, when the world economy was in the crapper in the first place.

  • Marc

    Exports accounted for only 7% of GDP when Smoot-Hawley was passed. After passage, they dropped only to 5.5%. Smoot-Hawley was hardly the impetus for the Great Depression. Too, it is virtually impossible to state Smoot-Hawley accounted for the drop, when the world economy was in the crapper in the first place.

  • http://www.tribbleagency.com/?p=4229 Just call it The Great Depression | Tribble Ad Agency : The Advertising Agency of Record

    [...] that there are no real parallels between then and now? We even tried our own Smoot-Hawley Tariff Act 2 weeks [...]