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MUTGR, why did the US ever start trade agreements?
Posted on: June 10, 2019 at 02:05:22 CT
TigerMatt STL
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Because tariffs f*ck up economies. A government bandaid for a government created problem.
https://www.pbs.org/newshour/economy/column-truth-trade-agreements-need
First.. why tariffs?
"In 1930, U.S. politicians implemented the infamous Smoot-Hawley tariffs, first attempting to use trade policy to assist Americans in need. By forcing U.S. consumers to buy American-produced and farmed goods instead of those from foreign countries, their hope was to shift demand and generate some additional tax revenue."
And the foreign response to the 1930 Smoot-Hawley tariffs, in this light, became understandable. Since the U.S. had attempted to shift the burden of its crisis onto foreigners, they had little choice but to reciprocate by attempting to do the same thing. Their retaliatory trade policies further reduced U.S. exports, and the recessionary decrease in worldwide demand meant a downward spiral of global trade.
In the end, no 1930s government was successful at passing along the costs of its crisis-era policies onto any foreigners.
Following World War II, the United States and 22 other countries finally rectified their mistakes by coming together to design the General Agreement on Tariffs and Trade. They negotiated basic rules for a trading system that would halt future governments from foolishly responding to economic panic by giving into the temptation to impose beggar-thy-neighbor policies. This system lives on today through the World Trade Organization, the institutional successor that took root in 1995.
Edited by TigerMatt at 02:06:32 on 06/10/19
https://www.pbs.org/newshour/economy/column-truth-trade-agreements-need
First.. why tariffs?
"In 1930, U.S. politicians implemented the infamous Smoot-Hawley tariffs, first attempting to use trade policy to assist Americans in need. By forcing U.S. consumers to buy American-produced and farmed goods instead of those from foreign countries, their hope was to shift demand and generate some additional tax revenue."
And the foreign response to the 1930 Smoot-Hawley tariffs, in this light, became understandable. Since the U.S. had attempted to shift the burden of its crisis onto foreigners, they had little choice but to reciprocate by attempting to do the same thing. Their retaliatory trade policies further reduced U.S. exports, and the recessionary decrease in worldwide demand meant a downward spiral of global trade.
In the end, no 1930s government was successful at passing along the costs of its crisis-era policies onto any foreigners.
Following World War II, the United States and 22 other countries finally rectified their mistakes by coming together to design the General Agreement on Tariffs and Trade. They negotiated basic rules for a trading system that would halt future governments from foolishly responding to economic panic by giving into the temptation to impose beggar-thy-neighbor policies. This system lives on today through the World Trade Organization, the institutional successor that took root in 1995.
Edited by TigerMatt at 02:06:32 on 06/10/19
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MUTGR, why did the US ever start trade agreements? - TigerMatt STL - 6/10 02:05:22
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