‘Mr. Tariff ‘Trump finds a historical ally in Herbert Hoover with his policy

William McKinley, the 25th president of the United States, gained the insight shortly before his death. « Nobody benefits from trade wars, » he said September 5, 1901 In Buffalo, New York. In his speech, he expressed himself for trade agreements: « Mutual profitable trade creates respect, trust and sustainable relationships. » The next day an anarchist McKinley shot down, who died a week later.

The plea for free trade in his last speech was a remarkable turn for the once rabid protectionist. But that political twist has remained somewhat underexposed. Donald Trump, great admirer of McKinley, also praises him mainly for his protectionist policy.

The current American president has repeated McKinley in interviews and speeches. In it he spoke of a « great president, » who made « America very rich through import duties. » In his inaugural speech, Trump devoted two paragraphs to loft expressions for his early predecessor and renamed the highest mountain in North America, the Denali, to Mount McKinley again.

Mr. Tariff

McKinleys reputation as a protectionist is understandable. From the start of his political career, the Republican, as a hardened opponent of Vrijhandel and soon gained the nickname Tariff Man. Trump now calls himself Mr. Tariff.

In 1890, McKinley presented the McKinley Tariff Act as a member of the House of Representatives, which increased the import duties on all foreign goods from an average of 38 to 49.5 percent. Purpose: protecting American industry against foreign competition.

As the American economy grew, McKinleys changed look at trade. He started to see that the domestic market was not big enough. American companies produced more than their country could take. The growth would stagnate without export. That eventually made the Tariff Man an advocate of free international trade.

This flexible spirit seems less present at Trump. He also conducted – also in his previous term as president – Despite warnings from economists Various taxes in. In recent weeks it has been a 20 percent higher rate on things from China and 25 percent storage on all steel and aluminum products that the US introduces. For wine from the European Union, he even threatened with a levy of 200 percent.

Hard -working American

Despite his respect for McKinley, Trump may find a better historical ally in Herbert Hoover. The 31st American president (1929-1933) put world trade on the spot with his protectionism.

The parallel starts in both campaign time. Both Trump and Hoover focus on the ‘hard -working American’, who is burdened by globalization.

At Hoover it was mainly about farmers – then good for a quarter of the American labor force. Up to and including the First World War they were able to lose their production well in Europe, which could not meet his own needs. But after 1918 European agriculture resigned and the demand for agricultural products from the US pleaded. Many American farmers had borrowed a lot to increase their production and suddenly stood in front of a debt mountain and declining income.

Hoover offered a solution: with higher input rates, he would protect American farmers against competition from abroad. That ignored the actual problem: the falling European demand for American products. Hoovers promise nevertheless was well in good earth. The voters embraced his protectionist message and elected him president in 1928.

In his campaigns, Trump would also use the jobs of the working American as a spearhead. « I’ll be the greatest Jobs President that god ever created« , Said Trump in 2015, when he announced his candidacy. In addition, he accused China of » stealing « jobs in the manufacturing industry. That most employment in this part of the economy had disappeared for other causes, such as automation, remained unnamed. In 2016, Trump became the 45th president of the United States and last year the 47th.

Repercussions

As President, Hoover introduced the so-called Smoot-Hawley Tariff Act because he believed that the taxes based on it would protect the American economy against foreign competition. And that would in turn lead to the preservation of employment in the US. The law increased existing import duties on twenty thousand types of goods, on average by around 20 percent.

The law aroused strong opposition, especially for fear of repercussions from trading partners. More than a thousand economists signed a petition against the law. Robert Lamont, Minister of Trade, almost went to his knees in June 1930 to beg Herbert Hoover that « idiotic levy » to veto, Lamont said later. His plea was to no avail. The law, which was introduced in May 1930, was not withdrawn. The average levy on to the US exported goods increased from 40 percent in 1929 to 60 percent in 1932.

At Hoover, the farmers in particular wanted to spare, a quarter of the American labor force at the time

The increase in trade barriers fell in the middle of the economic crisis due to the stock market crash of 1929. It is difficult to determine to what extent the taxes that crisis deepenedbut economists agree that they have at least worse the problems. Between 1929 and 1933 the US economy shrunk by 29 percent, While the export of the country of 7 billion dollars fell to 2.5 billion.

The law also strengthened nationalist trends worldwide. Important trading partners such as Canada and the European countries responded by increasing their own import rates. It resulted in an international trade conflict and a relapse of world trade with two thirds.

Free trade zone

Due to their role in the crisis, the resistance to trade rates had grown strongly. Hoover suffered in 1932 A crushing defeat in the election battle with Franklin D. Roosevelt. The new president distances themselves from the protectionist policy and thus put America on the path to economic recovery.

Since then, politicians and economists have often cited ‘Smoot-Hawley’ to get rid of trade barriers. For example, the American vice president Al Gore showed in 1993, during a debate about the upcoming free trade zone of Canada, Mexico and the US, laid down in the NAFTA agreement, a photo of Smoot and Hawley as a warning against protectionism.

What Donald Trump thinks is now clear. In his first term as president, new negotiations on this « disaster for the US » led to an adapted treaty, USMCA. And after his re -election, he announced on the first day of his presidency that he would levy 25 percent on ‘all products’ from Canada and Mexico. The levy announced on Wednesday on cars produced outside the US will also be able to seriously become serious both countries.

To share

Mail the editors