The Choking “Yolk” of Protectionism

by Don Boudreaux on October 24, 2010

in Great Depression, History, Reality Is Not Optional, Seen and Unseen, Trade

Here’s a letter to the Washington Times:

Jim Powell offers a long list of some of the many trade-destroying retaliatory tariffs that foreign governments imposed on their citizens in response to Uncle Sam’s 1930 Smoot-Hawley tariff (“The tempting path of protectionism,” Oct. 24).  I offer here yet another candidate for that list: Canada’s tariff on American eggs.

Harvard government professor Jeffry Frieden explains that “Smoot-Hawley raised the tariff on egg imports into the U.S. from eight cents to ten cents per dozen. This higher tariff caused egg imports from Canada to fall by 40 percent.  In response, Canadian authorities increased the tariff on U.S. eggs exported to Canada; this tariff went from three cents per dozen to ten cents per dozen.  The result was that American egg exports to Canada fell by 98 percent – from 11 million annually just before Smoot-Hawley to a mere 200,000.”*

That worked well.

Sincerely,
Donald J. Boudreaux

* Jeffry A. Frieden, Global Capitalism (New York: W.W. Norton, 2006), p. 255.

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