Historical Consequences in Trade Wars

The most prominent trade war of the 20th century was ignited by the Smoot-Hawley Tariff act of 1930, which imposed steep tariffs on roughly 20,000 imported goods. Led by Canada, America’s trading partners retaliated with tariffs on United States exports, which plunged 61 percent from 1929 to 1933. The tariffs were repealed in 1934.

Decades of tariff protection have done little to stem the industry’s decline. Domestic steel employment dropped from 135,000 in 2000 to 83,600 in 2016, according to the Bureau of Labor Statistics.

He cited what have become known as the “chicken wars” of the early 1960s, a trade dispute set off when Germany and France imposed tariffs on American chicken. The United States retaliated by imposing tariffs on an array of goods, including French brandy, light trucks and Volkswagen buses. The United States even threatened to reduce its troop presence in Europe. Despite those pressures, the newly formed European Economic Community did not back down, and in that sense the United States “lost” the war.

The biggest losers, though, were American and European consumers deprived of choices in the marketplace and forced to pay higher prices for what was available.

There were also unintended consequences. American automakers, insulated from foreign competition by the tariffs, failed to modernize, improve quality or reduce costs, setting the stage for a decades-long decline, which for Chrysler and General Motors ended in bankruptcy.