In 1931, New York City streets were filled with men queuing for bread, abandoned businesses, and soaring unemployment. This was the era of the Smoot-Hawley Tariff Act, where Washington believed that isolating America from foreign competition would strengthen its economy.
Contrary to expectations, the tariffs crippled the U.S. economy and global trade. Imports and exports plunged by about 50%, GDP shrank nearly 15%, and unemployment soared to 25%. Retaliatory tariffs spread worldwide, deepening the Great Depression and fueling nationalist movements globally.
Nearly a century later, Washington seems to be repeating history with its latest tariffs aimed at "outcompeting the world." These measures risk triggering the same destructive economic cycle.
The Myth of "Leveling the Playing Field"
The U.S. argues that these tariffs will protect American workers by addressing an "unfair" global system. However, this overlooks decades of economic strategies that favored the West. Advanced economies like the U.S. dominated high-value industries such as aerospace and semiconductors while outsourcing labor-intensive sectors like textiles and electronics assembly to developing nations. This imbalance fueled a consumerist boom in America, with cheap imports from countries like China, Mexico, and Vietnam keeping inflation low and living standards high.
The irony is stark: "China must sell one million shirts to buy one Boeing jet" highlights a system skewed in America's favor rather than an indictment of China itself.
Now, as the drawbacks of this model emerge—including stagnant wages and industrial decline—the U.S. faces a critical juncture. Instead of resorting to protectionist tariffs, policymakers should focus on workforce retraining, education reform, and modernizing infrastructure to address these challenges effectively.
Reference(s):
cgtn.com
