On trade, Trump risks repeating mistakes that led to Great Depression

I sure wish President Donald Trump had taken my Econ 101 class at Three Rivers Community College. Maybe then he would realize the dangers of tariffs

Let’s review: The last time we seriously imposed tariffs it was truly a disaster. We had established the Federal Reserve System in 1913 in response to large swings in the economy. It was obvious that the supply of money has a huge impact on economic growth. We gradually learned that manipulating the supply of money could stabilize the economy if done correctly. The economy then entered a phase of speculation that was fueled by lots of risky investment. This time period was known as the "Roaring 20s" that roared the country right into the stock market crash of 1929.

Now, with some careful manipulation of the supply of money we had a fighting chance of weathering the storm. Instead we had this ill-informed idea to hunker down and put some large tariffs on imported goods to protect U.S. industry and get us back on our feet. This was the Smoot-Hawley Tariff Act of 1930. This sent world trade into a tail spin. Remember that we were far from a global system at that point in time but even so those tariffs are credited with plunging us deeper into the Great Depression.

You might recall from your history books that during the depression unemployment reached 25 percent as other nations slapped tariffs on U.S. goods. The result? A trade war that prolonged and exacerbated the Great Depression. And what got us out of that depression? I believe every one of my former students could answer that question.

World War II.

As for Connecticut, this current plunge into tariffs on steel and aluminum is not a happy situation for what is left of our large manufacturers.

State Rep. Diana Urban represents the 43rd District of Stonington and North Stonington, where she lives. 

 

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