Donald Trump’s tariff plan could bring us back to the 1930s 

Donald Trump has claimed that Kamala Harris’s economic plan would result in an economic depression on the scale of the Great Depression of 1929. However, a major element of his own economic plan is the imposition of high tariffs on imports, which would be much more likely to lead to a depression than anything Harris is proposing. And there’s historical proof of that. 

The stock market crash of October 1929 is generally accepted as the event that began the Great Depression. However, the market had partially rebounded in the first half of 1930, before President Herbert Hoover signed into law the Smoot-Hawley tariff act in June of that year. That act increased tariffs by 20 percent on a wide range of industrial and agricultural products. It was a terribly misguided effort at protecting U.S. producers and reversing the depression. But its effect was to deepen and lengthen it and to spread it globally. From 1929 to 1933, global trade declined from $3 trillion to less than $1 trillion.  

Here’s how the Smoot-Hawley tariffs backfired: 

• By increasing the cost of living. Since tariffs are a tax imposed on American importers (not foreign exporters), they increased the cost of imported products to consumers.  
• By hurting U.S. exports. Other countries responded to the tariffs by raising their own tariffs, which severely harmed U.S. manufacturers and farmers.  
• By causing additional bank failures. The impact of tariffs on the economy contributed to more bank failures, especially in agricultural areas. 
• By reducing domestic consumption. People were forced to reduce consumption of goods, both imported and domestically produced. This led to American manufacturers and farmers selling less at lower prices. 

Trump’s tariffs would have the same or greater impact and would repeat Herbert Hoover’s tragic mistake at great cost to America’s industries, workers, farmers and ranchers. 

Three other points are worth making.  

First, Trump seems to believe that tariffs simply level the playing field with our trading partners and that those nations should have no right to retaliate. But virtually all existing U.S. tariffs are set at levels negotiated with other nations in a series of reciprocal trade agreements beginning after World War II. As a result of those deals, the U.S. gained commitments from other nations to reduce tariffs on American goods. Any increase in U.S. tariffs, therefore, would abrogate those agreements and open the door to commensurate tariff increases on U.S. goods. This would devastate many sectors of the U.S. economy that depend heavily on exports.

Moreover, Trump’s latest proposed tariff of 200 percent on John Deere machinery imported from Mexico would contravene the trade agreement he himself negotiated with Mexico and Canada in 2018 and it would allow Mexico to apply equivalent tariffs on an equal value of U.S. goods. America’s farmers well know that Mexico is the second largest foreign market for their products.

To be clear, tariffs targeted at proven unfair trade practices, such as products subsidized by governments or dumped at less than their cost of production are not the issue. Those are perfectly legitimate, as are existing negotiated tariffs. But unilateral tariffs applied across the board for the purpose of protectionism or revenue generation are dangerous and can be catastrophic. 

Further, rather than helping American manufacturing, Trump’s tariffs would likely cost more American manufacturing jobs than they will save. Many manufactured parts and agricultural commodities exported to the United States are essential inputs to American manufacturers producing goods here. For example, confectionery companies producing chocolate must import cocoa because it is not grown in North America. Under Trump’s tariffs, the price of cocoa rises and imperils jobs at companies like Hershey, Mars and numerous other American confectioners of all sizes. In the end, these indiscriminate, misguided tariffs protect the privileged few at the expense of the many. 

Next, let’s settle the question about who pays the tariff. When a foreign product arrives at a U.S. port, the U.S. importer presents to the U.S. Customs Service a bill of lading containing the quantity and value of the product (the amount the importer paid for the product). The Customs Service calculates the applicable tariff for that product and collects it from the importer. The amount collected is sent to the U.S. Treasury, just as are all other federal taxes. The product then enters the U.S. market for sale to consumers at a price that includes the tariff. It is no more complicated than that. 

Finally, it appears that Trump’s intention is to use tariffs to accomplish two goals: to reduce imports and to generate “trillions of dollars” of revenue. But doing both could be a challenge. If the tariffs have the effect of reducing imports, less revenue would therefore be generated than might have been hoped. And it should be noted that $28 billion of the revenue collected under Trump’s previous unilateral tariffs on Chinese goods in 2019 had to be used to only partially offset income lost by American farmers when China retaliated against U.S. farm goods, not to pay for new programs.  

The Trump tariff plan is a direct threat to American jobs and our global economic leadership — and clearly not a risk worth taking in this era of unpredictable global economic and political stability. 

Dan Glickman served as a member of Congress from 1979 to 1995 and served as secretary of Agriculture during the Clinton administration. Charlie Dent served as a member of Congress from 2005 to 2018.