We’re not living in a Smoot-Hawley world, and smart tariffs will benefit America

American Thinker ^ | 03/15/25 | Andrea Widburg

[SeekAndFind]

that, because they drive up prices, which makes manufacturers and consumers very sad. However, I’m not worried (I’ll explain why) and Michael Lind is even less worried (and he does a great job of explaining why ).

I won’t rehash all of Trump’s tariff actions here. I’ll just make three points that are why I’m sanguine about what he’s doing:

First, Trump’s focus in pushing tariffs isn’t to benefit specific industries at home, although he certainly hopes they will benefit. That’s been the traditional approach to tariffs. Trump, instead, is using tariffs as a non-military cudgel against foreign nations that are harming America. Whether it’s desperately unfair trade practices, fentanyl trafficking, or national security concerns, Trump is trying to force nations dependent on the American market to get their acts together.

In other words, while it looks economic, Trump’s policies have much broader implications for America’s national security. That’s new and important in the world of tariffs.

Second, although people are panicking and the stock market is in shock, I don’t believe the hit will be that bad. That’s because, while Trump is driving prices up in discrete regions of the economy, his policies generally will drop inflation. (Indeed, inflation has already dropped.)

As has been apparent since DOGE began, Trump is cutting rampant government spending, which always drives inflation. However, the most important thing is that Trump is unchaining America’s energy sector.

I’m not an economist and don’t pretend to be. I haven’t studied charts, looked at data going back decades or centuries, or read learned treatises. I have, however, figured out one thing: Fuel prices underlie everything.

[SeekAndFind]

For news about drop in inflation, see here:

https://x.com/DavidJHarrisJr/status/1899835430666678753

There is nothing in the economy that isn’t touched by fuel prices. With Trump taking steps to bring down fuel costs, all costs will drop, giving Americans room to absorb the damage from the tariffs. Other countries, those stuck in climate change madness, won’t have that cushion when Americans stop buying their products, so tariffs will indeed hurt them more than they hurt us.

[crz]

Trump just paused the talks on the Columbia River treaty.

BC thought they could create problems for USA people on the AlCan highway.

That treaty basically has us subsidize Canadian electrical power through the dams WE, basically helped build for flood control on the Canadian side of the border.

You Canucks better get a handle on your politicians. Or you aint gonna be able to come south and winter here in the south.

[PGR88]

It comes down to something called the Triffin Dilemma

After WWII, the US dollar became the world’s reserve currency, meaning the world did its trade in US dollars, all passing through our Federal Reserve and US banks. Gold was connected to the US dollar, until Nixon broke the peg and convertibility in 1971. Obviously, that gave the US (and Washington DC) great power over global institutions and the world economy.

The problem is - if others are using the US dollar outside of the USA, they must get an ever-increasing supply of it. Foreign banks are also creating more US dollar liabilities when they make loans, so there’s a permanent need for more US dollars abroad.

To support this vast global need for dollars, the USA is forced to supply it to them - though permanent trade deficits and permanent current account deficits.

China was able to game this system expertly

The American middle class and industry can no longer bear this burden to maintain the power of the DC empire, and Wall Street. Just look at 2022 Russia. Our physical trade sanctions are Russia were useless - they was nothing they needed from the USA. The USA tried to limit their trade options, but China, India and BRICS didn’t allow it.

So Biden turned to the financial weapon, the final one held under Triffin’s Dilemma - cutting off Russia’s access to USD flows and SWIFT. It was a powerful weapon, but it too, ultimately was not strong enough

Therein lies the contradiction. It was a clear sign of the decay and failure of the US and DC deep-state empire under the old system. Our trade and manufacturing power was non-existent (except for some areas of tech) while our only weapons were political, financial and institutional.

This is NOT a base for real long-term national power

[alloysteel]

Tariffs have a two-fold purpose. One is to protect the domestic industry or production of goods, and only incidentally to generate revenue in the form of taxation of foreign products, which in turn is paid by the purchasers of that commodity. Set the tariffs at such level as to make the domestically produced goods fully competitive in price, and the wealth stays home.

The Smoot-Hawley tariffs were merely punitive in nature, and reflected the national protectionist sentiments of the times.

[Rockingham]

The Smoot-Hawley tariffs do not deserve the blame attached to them for the Depression, which had a combination of causes that unfolded over time with poor understanding by the public or policy-makers.

More fundamentally, with the world on the gold standard at the time, the depth and severity of the US and global Depression was primarily due to gold accumulation policies by the US and France that contracted the amount of gold available as a monetary base.

In effect, the US and France caused a global gold squeeze that curtailed the issuance of money that circulated in finance, commerce, investment, and savings. This led to a general and persistent decline in economic activity and prices, with structural damage to financial systems around the world.

That is why the US and the rest of the world went off the gold standard.

[erlayman]

Costs may drop, prices probably not. And how does unfair trading, Fentanyl or national security relate to Canada exactly ?

[nopardons]

BTTT

[griswold3]

thanks for the info
Could you comment on the notion that nations that have trade deficits would not lose a trade war? I’m looking for more input.

[dmacg]

We are far more dependent on international trade today than during Smoot Hawley tariffs,1930. And no, those didn’t end well.

The current push for tariffs is hopefully a tactic that ends in free trade agreements. If it keeps escalating with no end in sight, it is going to bring down all involved.

Tariffs alone didn’t bring down the world economy of the 1930s. And tariffs are not the only problem the world economy today faces either.

Trade War described in the economic books this author brags of not reading:

‘You shoot a hole in the bottom of your boat. I retaliate by shooting a hole in the bottom of my boat.’ And so on.

[Georgia Girl 2]

In addition to that Trump plans to use the tariffs revenue to offset essentially eliminating the income tax. His proposal to eliminate income tax for people making $150,000 or less will encompass 93% of the working public. No need to repeal the 16th amendment.

[xone]

Have you seen Canadian tariffs on US ag products? Fentanyl is smuggled from Canada as well as illegals.

[unclebankster]

Have you seen Canadian tariffs on US ag products?

****************

International trade is about 27% of our GDP, the ratio varies from year to year depending on the state of the economy.

The reason you hear squealing in the AngloSphere Media, is because the UK and Canada have almost 70% of their GDP dependent on trade.

[erlayman]

Every country protects their agriculture from imports that exceed a certain quota. And the large majority of Fentanyl is smuggled by Americans across the border. If this is supposed to replace the income tax a recession is going to be the least of our problems.