by Don Boudreaux on August 20, 2008

in History, Trade

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.


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