Krugman on tariff history

An interesting column by Krugman comparing Trump's reckless use of tariffs as punishment to what went on in America post World War 1:

It is, I believe, pretty widely known that America turned its back on the world after World War I: refusing to join the League of Nations, slamming the doors shut on most immigration (fortunately a few years after my grandparents got here).

What’s less known, I suspect, is that America also took a sharply protectionist turn long before the infamous 1930 Smoot Hawley Act. In early 1921, Congress enacted the Emergency Tariff Act, soon followed by the Fordney-McCumber Tariff of 1922. These actions more than doubled average tariffs on dutiable imports. Like Trump, the advocates of these tariffs claimed that they would bring prosperity to all Americans.

They didn’t. There was indeed a manufacturing boom, driven not by tariffs but by new products like affordable cars and new technologies like the assembly line. Farmers, however, spent the 1920s suffering from low prices for their products and high prices for farm equipment, leading to a surge in foreclosures.

Part of the problem was that U.S. tariffs were met with retaliation; even before the Depression struck, the world was engaged in a gradually escalating trade war. Making things even worse, U.S. tariffs put our World War I allies in an impossible position: We expected them to repay their huge war debts, but our tariffs made it impossible for them to earn the dollars they needed to make those payments.

And the trade war/debt nexus created a climate of international distrust and bitterness that contributed to the economic and political crises of the 1930s. This experience had a profound effect on U.S. policy after World War II, which was based on the view that free trade and peace went hand in hand.

So am I saying that Trump is repeating the policy errors America made a century ago? No. This time it’s much worse.

After all, while Warren Harding wasn’t a very good president, he didn’t routinely abrogate international agreements in a fit of pique. While America in the 1920s failed to help build international institutions, it didn’t do a Trump and actively try to undermine them. And while U.S. leaders between the wars may have turned a blind eye to the rise of racist dictatorships, they generally didn’t praise those dictatorships and compare them favorably to democratic regimes.

There are, however, enough parallels between U.S. tariff policy in the 1920s and Trumpism today for us to have a pretty good picture of what happens when politicians think that tariffs are “beautiful.” And it’s ugly.