1,140 Economists Warn Trump Not To Make Great Depression Mistakes
More than 1,100 economists, including 14 Nobel Prize winners, have written a letter to President Donald Trump, along with Congress, warning against making the same trade mistakes that helped plunge America into the Great Depression.
The 1,140 economists sent the letter Thursday amid a mounting international trade battle. Trump has imposed a number of tariffs, including on steel and aluminum imports, but has granted temporary reprieves to the European Union, Australia and a handful of other countries.
The letter was intended to mirror a similar warning sent in 1930 that went unheeded.
“In 1930, 1,028 economists urged Congress to reject the protectionist Smoot-Hawley Tariff Act,” the authors wrote, citing a trade law that many economists are convinced deepened the Great Depression.
The letter warns that protectionist trade barriers erected by Trump and his withdrawal from critical international trade agreements will hurt the U.S. far more than they will help the nation.
“Today, Americans face a host of new protectionist activity, including threats to withdraw from trade agreements, misguided calls for new tariffs in response to trade imbalances, and the imposition of tariffs on washing machines, solar components, and even steel and aluminum used by US manufacturers,” said the letter, which was organized by the National Taxpayers Union.
“Congress did not take economists’ advice in 1930, and Americans across the country paid the price. The undersigned … strongly urge you not to repeat that mistake.”
The letter warns that trade barriers will increase prices American consumers will pay for goods and will “injure the great majority of our citizens.”
The letter also notes that few people gain from trade barriers. Lifting language directly from the 1930 letter, the economists warn that construction, transportation and public utility workers; professionals; and workers in banks, hotels, newspaper offices, in the wholesale and retail trades and scores of other occupations would “clearly lose, since they produce no products which could be protected by tariff barriers.” In addition, the “vast majority of farmers” would be hurt both as consumers paying higher prices and as food producers whose products will face retaliatory barriers.
The letter also warns that “bitterness” engendered by protectionist trade barriers is not conducive to world peace.
“Economists are pretty united in their opposition to protectionist trade policy,” Bryan Riley, director of the NTU’s free-trade initiative, told Bloomberg. “It’s the economic equivalent of a flat-earth trade policy.”
People might blame free trade for the decline in manufacturing “when in fact the changes have more to do with automation,” which will continue with or without trade barriers, he said.
The changes aren’t being driven by public opinion, he said. “This is not a grassroots movement against imports or NAFTA. This is being driven from the top,” he added.
There was no immediate response from the White House.