As a civilization, we tend to keep records of everything that happens to our individual lives, our towns, our countries, even our world as a whole, be it through photographs, videos, or written accounts of events. We keep a record of our history and our past mistakes as a species in order to make sure we don’t make the same mistakes over and over. One such example of a mistake made in the U.S. Congress is the Hawley-Smoot bill.
The Hawley-Smoot bill was a simple bill - it raised tariffs on about 900 imported goods. The main goal of the legislation was to encourage companies to buy local goods, in turn helping the U.S. economy. What Smoot and Hawley didn’t realise, however, is the effect it would have on the consumers. When companies had to pay more for imports, it meant that they had to increase the prices of their products to maintain a steady profit. This made prices for everything go up, making money worth close to nothing.
Recently, President Trump has made a proposal to increase steel and aluminum tariffs to 25% and 10%, respectively. Although not as big a change as the Hawley-Smoot bill, these tariffs can cause backlash from other countries affected by it. Many European countries and China have threatened to increase tariffs on their products substantially, meaning we could be headed towards a trade war. A trade war could, over many months and years, have the same effect as the Hawley-Smoot bill. Each country will continue to increase their tariffs in retaliation to prior tax increases, and eventually, we could end up with another depression.
In conclusion, it’s questionable how good these tariffs will really be for our economy. It’s impossible to predict what will happen if we start a trade war. Taking the consequences Hawley & Smoot faced for their bill, what will happen to us if we finalize this change?