What the 'mother of all trade wars' can teach us about U.S. tariffs, according to economists
A trade war is brewing — and, if history is any guide, the U.S. economy may not be too happy about it.
President Donald Trump on Saturday levied a 10% additional tariff on all imports from China starting Tuesday. In response, China retaliated with its own tariffs of up to 15% on select U.S. imports, starting Feb. 10.
Experts believe these are just the initial salvos of a broader trade war between the two nations.
Meanwhile, the U.S. is on the precipice of a trade spat with Canada and Mexico. Trump has also threatened to impose tariffs on the European Union — and, if that happens, the nations have vowed retribution.
"I will never support the idea of fighting allies," Danish Prime Minister Mette Frederiksen said Monday. "But of course, if the U.S. puts tough terms on Europe, we need a collective and robust response."
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The current animosity bears many similarities to an earlier episode in U.S. history — the Tariff Act of 1930 — which triggered an all-out trade war and exacerbated the Great Depression, according to economic historians.
The law, known as the Smoot-Hawley Tariff, was "one of the most controversial tariff acts ever enacted by Congress," Doug Irwin, an economics professor at Dartmouth College and past president of the Economic History Association, wrote in 2020.
It was also the last instance of a trade war involving the U.S., prior to Trump's first term, said Kris James Mitchener, an economics professor at Santa Clara University who studies economic history and political economy.
Smoot-Hawley sparked "the mother of all trade wars," Mitchener