{"id":11512,"date":"2018-03-05T04:12:40","date_gmt":"2018-03-05T04:12:40","guid":{"rendered":"http:\/\/www.lifeandnews.com\/articles\/?p=11512"},"modified":"2018-03-06T04:17:14","modified_gmt":"2018-03-06T04:17:14","slug":"trade-wars-are-good-3-past-conflicts-tell-a-very-different-story","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/trade-wars-are-good-3-past-conflicts-tell-a-very-different-story\/","title":{"rendered":"&#8216;Trade wars are good&#8217;? 3 past conflicts tell a very different story"},"content":{"rendered":"<p><span><a href=\"https:\/\/theconversation.com\/profiles\/marc-william-palen-227970\">Marc-William Palen<\/a>, <em><a href=\"http:\/\/theconversation.com\/institutions\/university-of-exeter-1190\">University of Exeter<\/a><\/em><\/span><\/p>\n<p>President Donald Trump renewed fears of a global trade war after <a href=\"https:\/\/www.nytimes.com\/2018\/03\/01\/business\/trump-tariffs.html?action=click&amp;module=Top%20Stories&amp;pgtype=Homepage\">he vowed<\/a> to slap steep tariffs on foreign aluminum and steel. <\/p>\n<p>The tariffs haven\u2019t even been formally proposed, yet other countries are already threatening countermeasures. The European Union, for example, <a href=\"https:\/\/www.nytimes.com\/2018\/03\/02\/business\/europe-steel-tariffs-trump.html\">promised to impose <\/a> tariffs on iconic American products like Harley-Davidsons, Kentucky bourbon and blue jeans, while China, Australia and Canada <a href=\"https:\/\/www.nytimes.com\/2018\/03\/02\/us\/politics\/trump-tariffs-steel-aluminum.html?hp&amp;action=click&amp;pgtype=Homepage&amp;clickSource=story-heading&amp;module=first-column-region&amp;region=top-news&amp;WT.nav=top-news\">all promised a response<\/a>. <\/p>\n<p>Brushing all that aside, the president tweeted that \u201ctrade wars are good.\u201d<\/p>\n<blockquote class=\"twitter-tweet\" lang=\"en\"><p>\n            <a href=\"https:\/\/twitter.com\/realDonaldTrump\/status\/969525362580484098\"><\/a>\n           <\/p><\/blockquote>\n<p>          <script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>But what exactly is a trade war and what are its consequences?<\/p>\n<p>As a <a href=\"http:\/\/www.cambridge.org\/us\/academic\/subjects\/history\/economic-history\/conspiracy-free-trade-anglo-american-struggle-over-empire-and-economic-globalisation-18461896?format=HB\">historian of trade<\/a>, I thought it would be worth recalling some illuminating examples, each of which led to disastrous results. <\/p>\n<h2>France and Italy go to \u2018war\u2019<\/h2>\n<p>Soon after Italy\u2019s unification in 1871, the young nation turned to protectionism to foster its \u201cinfant\u201d industries, whereupon it terminated its trade agreement with France in 1886. <\/p>\n<p>Italy raised tariffs as high as 60 percent to protect its industries from French competition. The French government responded by refusing to negotiate and instead threatened the Italians with punitive tariffs if Italy did not lower its own. <\/p>\n<p>Tariff retaliation followed tariff retaliation. In France, this resulted in the <a href=\"http:\/\/journals.cambridge.org\/action\/displayFulltext?type=1&amp;fid=2894044&amp;jid=ISH&amp;volumeId=37&amp;issueId=02&amp;aid=2894036\">passage<\/a> of the highly protectionist <a href=\"https:\/\/en.wikipedia.org\/wiki\/M%C3%A9line_tariff\">M\u00e9line Tariff<\/a> of 1892, which famously signaled the death knell of the country\u2019s flirtation with free trade. <\/p>\n<p>Both nations <a href=\"https:\/\/books.google.co.uk\/books?id=lrHwzh1eXNQC&amp;pg=PA63&amp;lpg=PA63&amp;dq=franco-italian+trade+war&amp;source=bl&amp;ots=CMciFzxXCy&amp;sig=2uTzmNeNQKlKiea76WFW9WcJLyU&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwiPgM7Pt8zLAhUITBQKHXFICHYQ6AEILDAD#v=onepage&amp;q&amp;f=false\">felt the costs<\/a> of the trade war, but the damage extended more widely. Franco-Italian trade fell drastically, followed by dislocations in countries where they got supplies. <\/p>\n<p>Another unintended result was that it pushed Italy closer to Germany and Austria-Hungary in the years leading up to the First World War. <\/p>\n<h2>The GOP takes on the Canadians<\/h2>\n<p>Although the GOP has in recent times <a href=\"https:\/\/www.denverpost.com\/2017\/01\/20\/donald-trump-leadership-shift\/\">called itself<\/a> the \u201cparty of free trade\u201d \u2013 before Trump anyway \u2013 it wasn\u2019t always thus. In the years following the U.S. Civil War, for example, when Republicans dominated the presidency, it was the proud <a href=\"https:\/\/theconversation.com\/trumps-anti-trade-tirades-recall-gops-protectionist-past-54631\">party of protectionism<\/a> and took efforts to solidify its economic nationalist platform. <\/p>\n<figure class=\"align-right zoomable\">\n            <a href=\"https:\/\/images.theconversation.com\/files\/115909\/original\/image-20160321-30917-191lx5o.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip\"><img alt=\"\" src=\"https:\/\/images.theconversation.com\/files\/115909\/original\/image-20160321-30917-191lx5o.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip\"><\/a><figcaption>\n              <span class=\"caption\">This 1891 Canadian cartoon suggests a policy of tariff retaliation against the U.S. aiding Canadian agriculture and industry.<\/span><br \/>\n              <span class=\"attribution\"><span class=\"source\">The Industrial League for Free Distribution<\/span><\/span><br \/>\n            <\/figcaption><\/figure>\n<p>The U.S. abrogated its reciprocity treaty with Canada in 1866, following which Canadian economic nationalists sought to pay their southern neighbor back \u201c<a href=\"https:\/\/www.academia.edu\/292177\/Protection_Federation_and_Union_The_Global_Impact_of_the_McKinley_Tariff_upon_the_British_Empire_1890-1894_Journal_of_Imperial_and_Commonwealth_History_\">in their own coin<\/a>\u201d \u2013 that is, through tariff retaliation. <\/p>\n<p>By 1879, Canadian Conservatives consolidated around their own national policy of protectionism. Some American companies \u2013 Singer Manufacturing, American Tobacco, Westinghouse and International Harvester \u2013 <a href=\"http:\/\/www.historyandpolicy.org\/opinion-articles\/articles\/the-protectionist-side-of-outsourcing\">decided to move their production to Canada<\/a> rather than pay the high import taxes. By the late 1880s, 65 U.S. manufacturing plants had relocated to Canada. In this case, far from halting outsourcing, protectionism caused it.<\/p>\n<p>Trade tensions reached a breaking point in 1890. Republicans, in charge of the executive and the legislative branches, passed the highly protectionist McKinley Tariff. Agricultural exports to Canada fell by half from 1889 to 1892.<\/p>\n<p>And when the Republicans passed the even more protectionist Dingley Tariff in 1897, Canada <a href=\"https:\/\/books.google.co.uk\/books?id=yB49AAAAIAAJ&amp;pg=PA652&amp;lpg=PA652&amp;dq=canadian+preferential+tariff+1897&amp;source=bl&amp;ots=j9sW5VtVSo&amp;sig=cGrBD5YHlHTkMWx67974I1se8Ak&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwidu5ORzczLAhUEwBQKHWX0ASgQ6AEIHTAA#v=onepage&amp;q&amp;f=false\">decided<\/a> that the best response was a double dose of tariff retaliation and closer trade ties with the British empire rather than the United States. <\/p>\n<p>It thereafter took nearly a century for free trade between the U.S. and Canada to develop. <\/p>\n<figure class=\"align-center \">\n            <img alt=\"\" src=\"https:\/\/images.theconversation.com\/files\/115914\/original\/image-20160321-30949-1gsaa71.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip\"><figcaption>\n              <span class=\"caption\">The fight between free traders and protectionists has been going on for a long time.<\/span><br \/>\n              <span class=\"attribution\"><span class=\"source\">Montreal Weekly Witness<\/span><\/span><br \/>\n            <\/figcaption><\/figure>\n<h2>Smoot-Hawley wars and the age of protectionism<\/h2>\n<p>Trade wars were by no means unique to the late 19th century. Far from it. <\/p>\n<p>The trade wars that followed the Republican passage of the protectionist <a href=\"https:\/\/www.investopedia.com\/terms\/s\/smoot-hawley-tariff-act.asp\">Smoot-Hawley Tariff Act of 1930<\/a>, which <a href=\"http:\/\/www.economist.com\/node\/12798595\">raised duties on hundreds of imports<\/a>, similarly contain illustrative <a href=\"https:\/\/books.google.co.uk\/books?id=u0pSGAY-YzEC&amp;printsec=frontcover&amp;dq=trade+wars&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwjf6Yv6uMzLAhVMVRoKHVtcCSE4KBDoAQgvMAQ#v=onepage&amp;q&amp;f=false\">lessons for today<\/a>. Canada responded with tariff increases of its own, for example, as did Europe. <\/p>\n<p>In a widely cited <a href=\"http:\/\/www.upenn.edu\/pennpress\/book\/979.html\">study<\/a> from 1934, political economist Joseph M. Jones Jr. explored Europe\u2019s retaliation. His study provided a warning about the trade wars that can arise when a single nation\u2019s tariff policy \u201cthreatens with ruin\u201d specialized industries in other countries, arousing \u201cbitterness\u201d throughout their populations. <\/p>\n<p>To provide but one example from Jones\u2019 study, the Italian public responded violently to the Smoot-Hawley Tariff. American-made cars were attacked and befouled on the streets of Italy. And in June 1930, Benito Mussolini vowed that \u201cItaly will defend herself in her own way.\u201d Tariff duties were increased on U.S. goods, and total U.S. exports to Italy plunged from US$211 million in 1928 to $58 million in 1932.<\/p>\n<p>An indignant Italy added insult to injury by signing a commercial treaty with Soviet Russia in August 1930, followed by a nonaggression pact two years later.<\/p>\n<p>More broadly, economist Douglas Irwin <a href=\"https:\/\/books.google.co.uk\/books?id=MIDsnT3Ze0YC&amp;printsec=frontcover&amp;dq=douglas+irwin&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwje9-ituczLAhXDqxoKHSrRAAYQ6AEILzAD#v=onepage&amp;q&amp;f=false\">notes<\/a> how the 1930 tariff \u201cwas very damaging from the standpoint of U.S. commerce\u201d because it sparked tit-for-tat trade discrimination against the U.S. and \u201cdiverted existing trade away.\u201d<\/p>\n<p>Economist and New York Times columnist Paul Krugman has similarly <a href=\"http:\/\/krugman.blogs.nytimes.com\/2009\/11\/30\/protectionism-and-the-great-depression\/?_r=0\">reminded<\/a> us that, although the Smoot-Hawley Tariff did not cause the Great Depression, the resulting international trade wars played a critical part \u201cin preventing a recovery in trade when production recovered.\u201d<\/p>\n<p><img loading=\"lazy\" src=\"https:\/\/counter.theconversation.com\/content\/92801\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" \/><em>This is an updated version of an article originally published on March 22, 2016.<\/em><\/p>\n<p><span><a href=\"https:\/\/theconversation.com\/profiles\/marc-william-palen-227970\">Marc-William Palen<\/a>, Lecturer in History, <em><a href=\"http:\/\/theconversation.com\/institutions\/university-of-exeter-1190\">University of Exeter<\/a><\/em><\/span><\/p>\n<p>This article was originally published on <a href=\"http:\/\/theconversation.com\">The Conversation<\/a>. Read the <a href=\"https:\/\/theconversation.com\/trade-wars-are-good-3-past-conflicts-tell-a-very-different-story-92801\">original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Marc-William Palen, University of Exeter President Donald Trump renewed fears of a global trade war after he vowed to slap steep tariffs on foreign aluminum and steel. The tariffs haven\u2019t even been formally proposed, yet other countries are already threatening countermeasures. The European Union, for example, promised to impose tariffs on iconic American products like [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":11513,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[277],"tags":[4127,1011,1894,1882,2197,2773,2775,1558,1892],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/11512"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=11512"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/11512\/revisions"}],"predecessor-version":[{"id":11514,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/11512\/revisions\/11514"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/11513"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=11512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=11512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=11512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}