President Trump wants to put a tariff on imported steel and aluminum. Whether you are for it or against it mainly depends on whether a steel or aluminum mill is located in your area.
In recent years we have eliminated most tariffs, claiming that free trade is better for the country and the world. President Trump prefers fair trade and puts up numbers showing that we have lost billions in trade imbalance with China, Mexico, Canada and other countries.
The “Mother of all Tariff” bills was Smoot-Hawley, which passed in June 1930. Reed Smoot , Utah Senator, and Willis Hawley, Oregon Congressmen, pushed through a bill that put tariffs on 20,000 imports. There was a lot of horse trading and arm twisting before it got in the final form. What was the effect on the economy? Most economists say it made the Great Depression worse because other countries retaliated. Others say the tariffs had little effect because international trade accounted for less than ten percent of our Gross National Product during the 1930s.
The “Trump Tariff” looks like an opening salvo aimed at other countries to persuade them to stop dumping steel and aluminum here below cost. Will it work? Can Trump close the deal? Regardless, if you are planning to buy a product with a lot of steel or aluminum in it, you may want to make your own deal pronto. If you wonder what groups likely suffer the most from tariffs, at the top of the list will be American farmers.
Historic quotes by Will Rogers on tariffs, including Smoot-Hawley:
“The tariff is an instrument invented for the benefit of those who ‘make’ to be used against those who ‘buy.’ As there is more buyers than there is makers, it is a document of the minority. But what a minority.” DT #912, June 28, 1929
“The Senate is still arguing over the tariff, this time with the President. The law says he can change various duties if he sees fit. Well, the Senate says that gives him too much authority, that they themselves are the ones that are really competent to do that.” DT #989, Sept. 26, 1929
“They didn’t pass the tariff bill, for the thing wasn’t any good. Never blame a legislative body for not doing something. When they do nothing, they don’t hurt anybody. It’s when they do something is when they become dangerous.” DT #1038, Nov. 22, 1929
“Mr. (Henry) Ford issued a statement last week that this new tariff bill, if passed, will be the worst thing in the world for all of us. You see a lot of manufacturing establishments try to cover up their own business ability by having the Government protect them against somebody that handles their business better than they do. We won’t see the real effects of this till we have all these other Countries passing restrictive tariffs against us. You can’t stop the other fellow from shipping his goods to us without him doing something to get even… Some of the smartest and most conscientious men in our National life have been divided on the tariff question. It’s not all Politics; a lot of it is a matter of real opinion, based on a long study. All Democrats don’t agree on it and no two Republicans have exactly the same opinion on it. So let’s give the old boys the benefit of the breaks… Arguing tariff is sorter like arguing religion. There just ain’t any answer. If a business thrives under a protective tariff, that don’t mean that it has been a good thing. It may have thrived because it made the people of America pay more for the object than they should have, so a few have got rich at the cost of the many. There is never any way of estimating the damage done by a tariff, that is, how much other countries retaliate in different ways.” WA #388, June 1, 1930
“Seven hundred legislators [Congress] have done what no other 700 men in the world could have done. They have succeeded in making a tariff bill that no one in the700 thinks is any good, and yet they will pass it.” DT #1208, June 9, 1930
“Congress passed the Tariff Bill. They know it was a lot of hooey but they went right on and passed it just the same. The Tariff Bill is going to be great for everybody who don’t buy anything or don’t eat anything. Now it is bound to do you good if you don’t buy or eat and that is the only one it is going to be any good for.” Radio, June 15, 1930