Here’s a letter that I sent on Monday to the Washington Post:
Amity Shlaes rightly points out that in the 1930s "An irate Canada and
many other nations retaliated" against the Smoot-Hawley tariff ("Five
Ways to Wreck a Recovery," August 18). Take, for example, the case of
eggs. Smoot-Hawley increased the tariff on eggs by 25 percent,
resulting in a 40 percent fall in egg imports from Canada. Canada
responded by raising its tariff on U.S.-produced eggs by 233 percent -
causing U.S. egg exports to Canada to fall from 11 million annually to
a paltry 200,000.*
Such retaliation isn’t the only reason protectionism harms an economy, but it’s a predictable and important one.
Donald J. Boudreaux
* See Jeffry A. Frieden, Global Capitalism (New York: W.W. Norton, 2006), p. 255.