00:00Let's talk about the T word.
00:02Stocks plunge as Trump's tariffs kick in.
00:05Sweeping global tariffs.
00:06Additional tariffs.
00:07Tariffs.
00:08Tariffs.
00:09Tariffs.
00:10Tariffs have sparked fear around the world.
00:16But they're nothing new.
00:18In fact, the history of trade is full of them.
00:21And some tariffs could offer important lessons.
00:24Back in October 1929, stocks on Wall Street collapsed,
00:28plunging the world into the Great Depression.
00:30Less than a year later, the United States passed the Smoot-Hawley Act,
00:34bumping up tariffs for foreign products coming into the country.
00:38President Herbert Hoover thought tariffs would protect American workers.
00:42But experts say they made things even worse.
00:45Smoot-Hawley, and particularly the trade retaliation against Smoot-Hawley,
00:49helped deepen the Great Depression.
00:52The last time a trade war on this scale has happened was in the 1930s.
00:57Exactly in 1930, it was the Smoot-Hawley Tariff Act,
01:01and it led to a global recession worldwide.
01:05We know only too well from history, from back in the 1930s,
01:08the infamous Smoot-Hawley Tariff,
01:10that the kind of policies which this could result in
01:15tends to make situations far worse rather than better.
01:19Economists from the US and Europe released a study in 2021.
01:23They looked at raw data from the 1930s.
01:26The data shows that some of America's biggest trading partners
01:29hit back at the Smoot-Hawley measures, imposing tariffs of their own.
01:34That made US products more expensive in those countries.
01:37And within three years, they'd cut imports from America by 28%.
01:42But what about the other countries?
01:45Most complained to Hoover's government.
01:48They did not respond with tariffs.
01:50But here's the thing.
01:51When you look at the goods these countries bought from America,
01:55there's a pattern.
01:56The numbers are way down for the most popular American products in each country.
02:01In fact, those imports fell on average 35%.
02:06Now, that may seem strange.
02:08After all, these countries decided against tariffs on US imports.
02:13But clearly, it was not business as usual.
02:16The research suggests many of these countries did hit back in their own way.
02:21So, for example, Czechoslovakia put a limit on car imports.
02:26In theory, that applied to every trading partner.
02:29But at the time, the US was the world's biggest exporter of cars.
02:34Britain was another country that did not respond with tariffs.
02:37Instead, it traded less with America and more with its own colonies.
02:42And so, by 1932, its imports from the US had dropped over 70%.
02:48So, these trading partners did not slap the United States with blanket tariffs.
02:53But that doesn't mean they turned the other cheek.
02:55Instead, they found strategic ways to respond.
02:59Smoot Hawley shows us that tariff disputes often go beyond just tariffs.
03:04And that can have a massive effect on global trade.
03:08And so, here we are, nearly 100 years later.
03:12I'm telling you, these countries are calling us up, kissing my ass.
03:17They are dying to make a deal.
03:19Please, please, sir, make a deal.
03:21I'll do anything.
03:22I'll do anything, sir.
03:23Like Hoover, President Trump believes tariffs on imports will help American workers.
03:29He's placed a 90-day pause on reciprocal tariffs for all countries except China.
03:35That's brought some relief, but the threat of tariffs remains.
03:39Reciprocal tariffs on countries throughout the world.
03:43Reciprocal.
03:44That means they do it to us and we do it to them.
03:47Very simple.
03:48Can't get any simpler than that.
03:50The T word could change trade for years to come.
03:54But if Smoot Hawley is anything to go by, it may not be the final word.
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