Tariffs: America’s Shortcut to Economic Ruin

 

Tariffs are nothing more than government-sanctioned protection for failing industries too weak to compete in a global market. The only thing tariffs successfully create is a nation full of overpriced goods and underperforming businesses.  History also proves that tariffs protect incompetence, not jobs—if the Great Depression taught us anything, it's that trade barriers lead to economic disaster.

When it comes to tariffs, the real cost might be more than just a few extra dollars at checkout. History teaches us that raising walls to protect industries often leads to far more harm than good. In fact, it’s no exaggeration to say that tariffs once helped drive the world into one of its darkest economic periods— the Great Depression. America should think twice before repeating the mistakes of the past.

Back in the late 1920s, European and American governments thought they were doing their economies a favor by slapping high tariffs on imported goods. They wanted to protect their own industries from foreign competition. But instead of saving jobs and boosting local businesses, these tariffs sparked a chain reaction that eventually brought the global economy to its knees. The Smoot-Hawley Tariff Act of 1930, one of the most infamous examples, raised duties on more than 20,000 imported goods in the United States. The intention was to protect American farmers from foreign agricultural products flooding the market. However, what followed was anything but beneficial.

As soon as the Smoot-Hawley Act passed, other countries retaliated with tariffs of their own. Global trade quickly slowed down as prices for goods went up, and international demand plummeted. Countries that relied on exporting goods saw their economies sink. Some economists argue that this vicious cycle of tariffs and retaliation was one of the key contributors to the economic collapse that became known as the Great Depression. By the end of the 1930s, unemployment rates in the U.S. had soared to about 25%, and the ripple effects were felt across the world. Protecting inefficient industries had created a perfect storm of inefficiency, low output, and decreased trade.

Fast forward to today, and it seems we haven’t learned much from history. Once again, America finds itself flirting with tariffs. Former President Donald Trump’s trade wars in the late 2010s offer a more recent case study. His administration slapped hefty tariffs on billions of dollars' worth of Chinese goods in an effort to protect American manufacturing jobs and reduce the U.S. trade deficit. In response, China imposed retaliatory tariffs on American products, particularly in the agriculture sector. Farmers were hit hard, with some losing key export markets they had depended on for years. A proverb from that time might say it best: “When elephants fight, it’s the grass that suffers.”

What’s particularly troubling about tariffs is that they often protect inefficient industries that should have been allowed to fail or adapt to new market conditions. Take, for instance, the American steel industry. The U.S. has imposed tariffs on foreign steel several times throughout its history, under the guise of national security and protecting domestic jobs. But what has really happened? The price of steel went up, and American industries that rely on steel, like car manufacturers and construction companies, were forced to pay more. Instead of fostering innovation and efficiency, these industries now have to deal with higher costs, which they often pass on to consumers. Tariffs, rather than helping these industries thrive, have locked them into a cycle of dependency on government protection.

There’s another sneaky side effect of tariffs that’s often overlooked. They not only raise prices for consumers but also limit their choices. In a world where people expect variety and innovation, tariffs can lead to stagnation. When companies don’t have to compete with foreign products, they have less incentive to innovate or improve. A prime example can be seen in the tech industry. The global supply chain, which allows companies to source components from all over the world, has made electronics more affordable and accessible to people everywhere. But when tariffs disrupt that supply chain, prices rise, and innovation slows down.

History warns us that when governments intervene too much in trade, they often create more problems than they solve. Take, for instance, the Corn Laws in 19th-century Britain. These tariffs on imported grain were meant to protect British farmers from cheaper foreign imports. However, the laws led to skyrocketing food prices, widespread poverty, and social unrest. It wasn’t until these laws were repealed in 1846 that Britain’s economy began to recover and thrive once more. A wise leader learns from history, but a foolish one repeats its mistakes.

Some might argue that tariffs can be used as a negotiating tool to pressure other countries into changing unfair trade practices, and there’s some truth to that. But when tariffs become excessive and are used to protect industries that don’t deserve protection, they end up hurting everyone. Just look at the recent tariffs on solar panels. While they were intended to help American manufacturers, the higher prices on solar equipment slowed down the adoption of renewable energy projects, which not only delayed progress toward cleaner energy but also hurt jobs in the solar installation sector. In this case, protecting one industry harmed another.

Moreover, the recent supply chain disruptions caused by the COVID-19 pandemic should serve as a stark reminder that global trade is deeply interconnected. Countries need each other to supply goods and materials. Tariffs, in this context, act like barricades on a highway, causing delays and shortages. The pandemic highlighted how vulnerable supply chains can be, and the last thing we need is more barriers like tariffs slowing down the recovery process.

What makes tariffs especially dangerous is the illusion they create—that a country is somehow better off by walling itself off from the global economy. In reality, no nation can produce everything it needs efficiently and cheaply on its own. Trade allows countries to specialize in what they do best and exchange goods and services with others who excel in different areas. A world without trade is a world without progress.

To put it simply, tariffs are a relic of a time when countries thought they could go it alone, but in today’s interconnected world, such thinking is dangerously outdated. If America continues to raise trade barriers, it risks falling into the same trap that contributed to the Great Depression. Protectionism may seem like a quick fix for struggling industries, but the long-term consequences can be disastrous.

In a broader sense, tariffs are like a Band-Aid slapped over a wound that requires surgery. They may offer temporary relief, but they don’t address the underlying problems. Industries that are inefficient need to evolve, not be protected from competition. History has already shown us the dangers of excessive tariffs, and America should be wary of repeating those mistakes. Otherwise, we may find ourselves in an economic downturn that makes the Great Depression look like a dress rehearsal. The irony, of course, is that in trying to protect industries from foreign competition, we may end up destroying them ourselves.