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The last Great American Trade War was at the beginning of the Depression…

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That’s story in a piece from Chris Cillizza,, who now hangs his hat over at CNN….

The US is now leveling large import fee’s on good coming to this country from China…

I do NOT know how this works…

But if the American importers get bills of BILLIONS from their Government to pay?

They are will surely pass the costs on in the products they sell…

THAT will drop sales on those products, a lot which are simply NOT made in this country…

They will be job loses sooner or later…

And some American companies maybe able to increase sales…

But the American economy IS gonna feel this…

Some economists feel that’s ok, because the American economy is so big…

I hope they are right…

Because the American Congress…

Led by Republicans?

Seem afraid to confront a guy who has the money to get thru this without problems us regular common people …

At midnight Thursday, the United States officially entered into a trade war with China. The US slapped a 25% tariff on more than 800 Chinese products, with an estimated cost of $34 billion. China immediately responded with a series of tariffs of its own, insisting that President Donald Trump had started “the biggest trade war in economic history.” Trump has promised to impose $16 billion in further China tariffs later this summer and has openly speculated about tariffs totaling hundreds of millions of dollars before all is said and done.

What’s the theory behind Trump’s case? And what’s the history of starting just these sort of trade wars? A few months back I reached out to Patrick Gillespie, an economics reporter for CNNMoney, to get some answers.
Our conversation, conducted via email and lightly edited for context, is below.
Cillizza: Let’s start with Trump’s tweet that “trade wars are good, and easy to win.”How much basis in fact is there for that claim?
Gillespie: America’s last trade war exacerbated the Great Depression in the 1930s, when unemployment rose to 25%. Claiming it was protecting American jobs, Congress passed the Smoot-Hawley Act in 1930. The original bill was meant to protect farmers. But to build political support, many lawmakers asked for tariffs — or taxes — on all sorts of goods in exchange for their vote.
Several nations, such as Canada, slapped steep tariffs — or taxes — on US goods shipped and sold abroad. For example, US exports of eggs to Canada fell to 7,900 in 1932 from 919,000 in 1929, according to Doug Irwin, a Dartmouth professor and former trade adviser to President Reagan.
The result: US imports fell 40% in the two years after Smoot-Hawley. Banks shuttered. Unemployment shot up. Surely, there were a litany of factors at play. But economists widely agree Smoot-Hawley made the Great Depression much worse than otherwise.
In 2016, I asked Trump’s trade adviser Peter Navarro whether Trump’s trade policies would start a trade war akin to Smoot-Hawley. He told me “there are no similarities at all.” He added that Smoot-Hawley was a “protectionist” tariff — that is, it fired the first shot in the war. Navarro argued that trade has been unfair for decades. Trump’s tariffs would be “defensive.”
A good gut check came from New York Federal Reserve President William Dudley — currently the No. 2 in rank at America’s central bank. In a Thursday speech (before Trump’s tariffs), Dudley said tariffs and other trade barriers are a “dead end” and “destructive.”
Cillizza: Trump’s decision on steel and aluminum tariffs seem to catch his administration by surprise. Why?
Gillespie: Trump’s rhetoric on trade has been mainly pointed toward China. But these tariffs would hit our top allies harder than China…..

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  1. James, Your analysis is essentially correct. You might want to add the if one country imposed tariffs, the other country often retaliates. But if it didn’t, the exchange rate would be impacted, so that the currency of the country that is having its goods Taxed will become s little less expensive – essentially partially offsetting the tariff.

    Oh, and The vast majority of economists are for free trade.

      • Kudlow used to support free trade. I assume he still does, but I have ‘t been following him lately.

        A good case can be made that it is not inconsistent for a free trader to support tariffs on countries such as China that don’t practice free trade themselves, and to only remove those tariffs when those countries remove thir own pritectionist tariffs. I actually support that concept in principle.

          • The American Congress sits on its hands while Trump goes from roughly 80 things to 10,000 slapped with import fee’s coming from China to the US….

            “President Trump is remaking the global trade order without significant political resistance or penalty, unchecked by a largely compliant Congress and bolstered by the loyalty of his supporters — even those likely to be hurt by his burgeoning global trade war,” the Washington Post reports.

            “Congress’s passivity in the face of Trump’s escalating trade conflict is one of several factors that have made it easier for the president to push on. Others have included markets that haven’t melted down, business leaders who have done little beyond using rhetoric to criticize the trade spat, and Republican voters who have stood by their president. In each of these cases, critics of his trade policy had hoped Trump would find reason to be dissuaded.”…

            Politicalwire….

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