Worst. Tariffs. Ever. (update)

Key takeaways

The Smoot-Hawley Tariffs showcased the negative consequences of unfettered protectionist policies and their role in exacerbating economic downturns.
Current tariffs under Trump and Biden show similarities to the Smoot-Hawley era, raising concerns about their potential negative impact on both American consumers and international trade.
Tariffs often lead to higher prices for consumers and do not necessarily achieve their intended goals of protecting domestic industries.
The legislative response to the Smoot-Hawley disaster resulted in a shift of power to the executive branch regarding tariff legislation, a structure that is relevant in today's political context.

Summary

Exploring the Smoot-Hawley Tariffs

The episode delves into the historical context of the Smoot-Hawley Tariffs, enacted in 1930 as an attempt to protect American farmers during an economic boom that ultimately led to the Great Depression. The podcast recounts how politicians created a complex web of tariffs, sparked by desperation from various industries, and how it resulted in over 800 tariff increases, impacting not only the American consumers but also leading to retaliatory measures from other countries.

The Modern Tariff Dilemma

Fast forward to the present day, the podcast draws parallels between the Smoot-Hawley Tariffs and the tariffs proposed during Donald Trump's presidency. The discussion highlights how Trump's administration imposed significant tariffs on imports, especially from China, under the guise of protecting American workers. The podcast raises questions about the economic repercussions of such protectionist measures, drawing on lessons learned from Smoot-Hawley.

Economic Backlash and Consumer Impact

The episode emphasizes the economic consequences of tariffs, including the idea that while tariffs might theoretically protect some domestic industries, they often lead to higher prices for consumers and wider economic damage. The discussion includes expert opinions, detailing how historically, tariffs like those introduced during the Trump administration created significant burdens, resulting in higher costs for consumers and not delivering the intended benefits to the American economy.

Legislative Legacy and Power Dynamics

A significant theme in the episode revolves around the legislative changes initiated after the failure of the Smoot-Hawley Tariffs, where Congress delegated tariff powers to the executive branch to prevent similar disasters. The discussion touches on how the current political landscape reflects this legacy, as the president's power has grown over time leading to concerns about unchecked tariff authority in the hands of modern leaders.

Show notes

The Smoot Hawley Tariffs were a debacle that helped plunge America into the Great Depression. What can we learn from them?

Today on the show, we tell the nearly 100-year-old story of Smoot and Hawley, that explains why Congress decided to delegate tariff power to the executive branch in the first place. It's a story that weaves in wool, humble buckwheat, tiny little goldfish, and even Ferris Bueller... Anyone? Anyone?

It's also what set the stage for the Trump tariffs.

President-elect Donald Trump enacted a heap of import taxes in his first term, in particular on goods from China. President Biden's administration largely kept those tariffs in place, and levied new tariffs as well, on electric vehicles and solar panels.

And now, as Trump's second presidency is on the horizon, he has promised even more tariffs on Mexico, Canada, China, and even on all imports across the board.

And now, as Trump's second presidency is on the horizon, he has promised even more tariffs on Mexico, Canada, China, and even on all imports across the board.

We update this classic episode about the Smoot Hawley Tariffs, and review the impact of more recent efforts from Trump and Biden alike.

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