Arrogant Tariff History Repeats

“Trump took this booming economy and upended it with massive tariff hikes.” Fareed Zakaria.

Trumps Tariffs

What is it with leaders whose arrogance blinds them to the lessons of history? Are they so enamored by their own ineptitude they cannot see or feel the suffering and misery they inflict on millions. Do people like Trump ever bring good into the world?

Below is a transcript given by Fareed Zakaria, reference.

Fareeds Take: Trumps Tariffs upended a booming economy. CNN. YT 21 April 2025.

I have added subtitles to the transcript.

Fareed Zakaria’s History Lesson.

Recent

Here's my check. When Donald Trump was inaugurated, by most measures, the United States was the strongest major economy in the world. Growth was robust. Unemployment was at historic lows. Inflation had fallen to a manageable level. And productivity, the elixir of economics, had picked up.

Trump took this booming economy and upended it with massive tariff hikes. Has anything like this ever been done before?

Roaring 20s

Well, nothing quite as self-defeating, but the Smoot Hawley tariffs were also imposed after a decade of heady growth. That story is worth recalling because there are a startling set of parallels to today's situation. We remember the 1920s as the Roaring 20s. In economic terms, it's out. The annual growth rate for the decade was over 4%. Unemployment stayed low for most of it. Revolutionary innovations defined the period, allowing the mass production of cars, aeroplanes, telephones, radio and movies. Television was birth then, as were band aids, which many saw as the greatest thing since sliced bread, which was also invented then. Henry Ford perfected the mass production techniques that would define modern manufacturing for decades.

Hollowing out the 20s

Just as the 1990s and 2000s were celebrated for creating a new economy, that was the feeling about the 1920s. But there was another story about the 20s, about the hollowing out of a core American industry, of jobs being shipped abroad and the loss of the soul of the country. You see, agriculture had been at the heart of the American economy, comprising most of the workforce until the late 19 century. Even by 1900s 40% of the American workforce labored in the agricultural sector. The country was defined by its Yeoman farmers. Every one of the first American presidents, Washington Adams, Jefferson, had owned and run farms.

Rise of Manufacturing

But the rise of manufacturing had resulted in the erosion of that landscape. By the 1920s, more than half of the country had moved into cities, and only 25% of Americans worked in agriculture. The American way of life was in peril.

Americas first populist movement

America's first great populist movement was birthed in the late 19th century in response to the decline of agriculture. It briefly captured the Democratic Party, with the fiery populist orator William Jennings Bryan becoming the nominee of the Democratic Party three times. By the 1920's, the movement had weakened and moved into parts of both the Democratic and Republican parties. It gained ground as farming got hit hard. During that decade, you see, after the boom years of World War One, when America had said a Europe at war, there was a sharp drop in demand once Europe's farms returned to production.

One Big Beautiful Bill

The Republican establishment was opposed to subsidies to benefit agriculture. Calvin Coolidge vetoed measures helping farmers when he was president in the 1920s. But by 1930, in the wake of the 1929 stock market crash and economic slowdown. Congressional Republicans, from farm states were adamant farmers needed support. They allied with legislators who wanted to protect American industry and produced what they might have described as one big, beautiful bill that raised tariffs substantially on a variety of products, industrial and agricultural.

Over 1000 economists wrote an open letter to President Herbert Hoover urging him not to sign the bill because it would raise prices or lower standards of living and hurt American exports. But in those days, Congress was the leading branch of government on trade and mostly everything, and Hoover reluctantly signed the bill into law. Hat tipped to Douglas A. Urban (Peddling Protectionism) for a superb book on all of this.

Tariff History Repeated

The global reaction then was similar to now. Countries were outraged. Many retaliated, and those with the closest economic ties to the US responded the most forcefully. The tariffs upended relations with America's neighbour, Canada. The outbreak of protectionism infuriated Canadians, who retaliated strongly with tariffs of their own. Canadian nationalism surged and in the elections of that year an eerie parallel to this year, the party that was seen as most authentically anti American, won.

Politics of Nostalgia

Scholars disagree on the effects of the Smoot Hawley tariffs. Few now argue, as they once did, that these tariffs caused the Great Depression. But many believe they exacerbated it. What no one disputes is that they failed to preserve American farm jobs. Today, agriculture employs around 1% of the American workforce. In the 20th century, we look back fondly on farming as special. It was important to grow things and so we tax the entire country to protect farmers. And the 21st century we have similar views about manufacturing. It's important to make things. So, we are taxing the entire country, more than 80% of which works in services, to subsidise the 8% of the workforce that works in manufacturing. It is fundamentally a politics of nostalgia, looking fearfully at the past, not confidently at the future.

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Human behavior like history keeps repeating itself when the lessons of the past are ignored.