The Voice of U.S. Exporters Must Be Heard To Prevent

If you think America is going “Back to the Future” with talk about the Great Depression, job losses, and other references to the 1930s, then America’s slide toward Isolationism will put this country in a tragic time machine that will have devastating results.

During the 1930s, the combination of the Great Depression and the memory of horrific losses in World War I contributed to pushing American public opinion and policy toward Isolationism. For example, the Smoot-Hawley Tariff Act of 1930 essentially shut off imports into the U.S. by imposing prohibitively high tariffs on foreign goods.

Echoing developments today with U.S. trading partners, even before the Act went in effect, boycotts of U.S. goods began. As early as September 1929, President Hoover ‘s administration had received protest notes from 23 trading partners, but threats of retaliatory actions were largely ignored.

Before the Smoot-Hawley Tariff Act even went into effect in 1930, U.S. imports decreased 66 percent from $4.4 billion dollars in 1929 to $1.5 billion dollars by 1933, and exports decreased 61 percent from $5.4 billion dollars to $2.1 billion dollars.

According to government statistics, U.S. imports from Europe decreased from a 1929 high of $1.3 billion to just $390 million during 1932, while U.S. exports to Europe decreased from $2.3 billion in 1929 to $784 million in 1932. Overall, world trade decreased by some 66 percent between 1929 and 1934. This was a major contributor to the Great Depression as jobs disappeared.

During this time, Isolationists advocated non-involvement in European and Asian conflicts and non-entanglement in international politics. Although the United States took steps to avoid political and military conflicts overseas, it continued to expand economically and protect its interests in Latin America. The reality of a worldwide economic depression and the need for increased attention to domestic problems only served to bolster the idea that the United States should isolate itself and the Western Hemisphere from troubling world events.

This attitude prevailed until the start of the 20th century which coincided with American colonization of the Philippines resulting from the Spanish-American War. America’s interest in the global community only reawakened during the 1940s as the U.S. pushed into the far western Pacific Ocean during World War II. At the same time, the continents were linked as the result of improved transportation and communication, as well as through steamships, undersea cable, and radio. The growth of shipping and foreign trade slowly enhanced America’s world role.

Now when the world’s economy is challenged, instead of finding global solutions, many countries, including the U.S., are turning inward and revisiting Isolationism. Russia is taking the lead on this ill-conceived idea. Other nations are sure to follow.

A trade war is the last thing this country needs when it’s trying to create jobs. A robust trading environment is the number one catalyst for job creation. If you shut down free trade, you shut down American jobs and the increase in GNP that comes from global trading.

If you want to see the flip side of Isolationism, see all the positive things that will result when Congress opens markets to U.S. exporters when it ratifies the Colombian, Panamanian, and South Korean Free Trade agreements.

At least there appears to be some positive signs from Washington when it comes to global trade. By all accounts, despite pressure by trade unions, it looks like NAFTA will remain intact and not renegotiated. It also looks like the Panama free trade agreement will be the first of the “Three Trade Hostages” to see the light of day, although the Colombian agreement should be the first in line.

Isolationism was a bad idea in the 1930s and it’s a bad idea today. It’s up to American exporters and others to get Congress to wake up and overturn flawed trade policies that are only delaying job creation and prolonging our current economic meltdown.

Leave A Comment