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1,100 Economists Agree: Don't Repeat Mistake that Contributed to the Great Depression
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May 8, 2018

Posted By Cindy L. Squires, Esq., Friday, January 4, 2019

More than a thousand economists come together to urge Congress to avoid protectionist policies that will harm U.S. consumers that purchase imported goods as well U.S. farmers that would lose access to critical foreign markets. This is the position of the vast majority of economic thinkers today, right? Well, yes and no. These points were actually taken from a letter sent 88 years ago from 1,028 economists to Congress urging them to reject the Smoot-Hawley Tariff Act.

 

Unfortunately, Congress failed to heed the warning and anyone who has seen the movie “Ferris Bueller’s Day Off” knows how that turned out. Smoot-Hawley became law. The U.S. increased tariffs on more than 20,000 imported goods. Trading partners retaliated. U.S. imports and exports decreased by nearly two-thirds. Gross Domestic Product plunged. Hardly the economic bonanza that was hoped for.

 

Almost nine decades later, a group of more than 1,100 economists from academia, policymaking, and business joined a letter spearheaded by the National Taxpayers Union that urged President Trump and Congress not to repeat the mistake of imposing protectionist policies. Rather than lay out a point-by-point case against new tariffs in 2018, the economists largely quoted the 1930 letter in order to illustrate that the U.S. has been down this road before and we know where it leads.

 

For our part, IWPA is working on its own and as a member of several broad industry coalitions to educate policymakers about how critical trade is to American businesses and consumers and how additional tariffs will undo the gains from lowered federal tax rates and regulatory reform that has been a priority for the Trump Administration and Republicans in Congress.

 

The good news is that our message is getting through. In April, IWPA President Caroline McIlvain of J. Gibson McIlvain Company traveled to Washington, D.C. to join IWPA Senior Manager of Government and Public Affairs Joe O’Donnell to participate in a Capitol Hill fly-in organized by the U.S. Global Value Chain Coalition of which IWPA is a member. We met with several Members of Congress and their staff and there was broad agreement that many U.S. businesses rely on global value chains to produce and sell goods that support high quality jobs in their districts. IWPA had an especially compelling story to tell, since in many cases the wood products our members supply are especially critical to U.S. manufacturers in the homebuilding, recreational vehicle, and boat building industries and wouldn’t be available in the U.S. without free and fair trade.

 

In 1930 Congress failed to heed the advice put forward by leading economists. Now and in the years to come, IWPA will work with our members and industry allies alike to make sure policymakers understand the many reasons a new era trade protectionism must be avoided.

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