DeepSummary
This podcast episode takes a look at the history of tariffs in the United States and how they have gone in and out of fashion over time. The episode outlines three main reasons why countries impose tariffs: revenue, restriction, and reciprocity. It explains how tariffs were initially used as a way for the fledgling US government to raise revenue, then shifted to being used as a protectionist measure to restrict foreign imports and shield domestic industries.
The episode delves into the infamous Smoot-Hawley Tariff Act of 1930, which raised tariffs on thousands of goods and sparked a global trade war during the Great Depression. It then discusses how after WWII, the US embraced a reciprocity approach by negotiating tariff reductions with other countries through agreements like the World Trade Organization.
More recently, the episode notes that tariffs have made a comeback with both Donald Trump and Joe Biden imposing new tariffs on Chinese goods. Economists express concerns about these tariff hikes, arguing that they lead to higher costs for American businesses and consumers while also potentially hindering the transition to electric vehicles needed to combat climate change.
Key Episodes Takeaways
- Tariffs have historically served three main purposes in the US: raising revenue, restricting imports, and reciprocal trade negotiations.
- The Smoot-Hawley tariffs of 1930 sparked a global trade war that exacerbated the Great Depression.
- After WWII, the US embraced negotiated tariff reductions through agreements like the WTO.
- Both Donald Trump and Joe Biden have revived tariffs, particularly on Chinese goods, despite economists' concerns over costs to businesses and consumers.
- Tariffs on Chinese electric vehicles could hinder the transition to more affordable EVs needed to combat climate change.
- There are concerns that proposed higher tariffs could significantly raise costs for American families.
- While economically questionable, tariffs can be politically popular as protectionist trade policies.
- The cyclical nature of tariff policy reflects shifting economic and political forces over time.
Top Episodes Quotes
- “Tariffs are taxes, and someone pays for those taxes.“ by Luis Baldemaro Quintana
- “There's something called log rolling, which is if you vote for my tariff, I'll vote for yours. And so you get a little higher sugar tariff, but then the sugar people say, well, we'll help you out with your steel tariff in Pennsylvania. And things sort of spun out of control, and the tariff levels went up quite a bit.“ by Doug Irwin
- “But for that transition to be successful, we need cheap electrical vehicles, and these tariffs mean that in the future we're not going to have them at the lowest price possible.“ by Luis Baldemaro Quintana
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Episode Information
The Indicator from Planet Money
NPR
5/23/24
Today, a brief history of US tariffs: how they came into fashion, fell out of fashion, are now back again and why economists aren't too happy about it.
Related Episodes:
Trade wars and talent shortages (Apple / Spotify)
The surprising leader in EVs (Apple / Spotify)
A brief history of tariffs
Worst. Tariffs. Ever.
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