Policymakers and economists have been trying to come up with the best policy mix to improve economic conditions in the United States following the large-scale recession. They have proposed the following:
The U.S. will no longer import goods or services from other countries. It will instead focus on exports that employ American workers in domestic manufacturing plants. All products sold in the U.S. will bear the stamp “Made in the USA” on their label.
Discuss the different types of protectionist measures (tariffs, quotas, or ending trade) and their potential impacts on the United States’ reputation with the rest of the world. Is there a likelihood of a trade war? Did the Smoot-Hawley tariff work as intended?
Assess the pros and cons of this policy mix for the United States. Make sure to comment on the effect on GDP, inflation, and unemployment if the U.S. were to cut off international trade. Is this the best solution to get the U.S economy back to potential?
If you were a policymaker, what changes would you make to this policy mix? How effective do you think your policy will be in restoring full employment? Or, should there be no intervention?
Provide clear and concise arguments with references to the articles and videos, additional research on the topic, and your understanding of the economic theories.
A few resources. You are encouraged to reference other articles/videos on your essay.
Smoot-Hawley Tariff and Protectionism in the U.S.:
• Gardner, S. & Tong, S. (2017, August 24). The American protectionism bill that made the Great Depression worse. Marketplace. Retrieved from https://www.marketplace.org/2017/08/24/sustainability/trade-stories-globalization-and- backlash/what-was-one-worst-pieces-us-legislation
Gardner, S. & Tong, S. (2017, November 13). A trio of proposed tariffs echo America’s protectionist past. Marketplace. Retrieved from https://www.marketplace.org/2017/11/09/economy/tariff-Trump- protectionist-solar
Inskeep, S. (2018, April 3rd). U.S. farmers say they’re paying for Trumps aggressive trade actions. Retrieved form https://www.npr.org/2018/04/03/599097041/u-s-farmers-say-theyre-paying-for- trumps-aggressive-trade-actions
Mayer, A. (2019, May 22nd). Collateral damage of the trade war, farmers want Chinese market reopened. Retrieved from https://www.npr.org/2019/05/22/725481884/collateral-damage-of-the- trade-war-farmers-want-chinese-market-reopened
Samuelson, T. (2016, January 15). The reality behind Trump’s call for higher tariffs. Marketplace. Retrieved from https://www.marketplace.org/2016/01/15/world/reality-behind-trumps-call-tariffs
Scott, A. (2019, June 14). Retailers ask Trump to stop tariff threats on China. NPR. Retrieved from https://www.npr.org/2019/06/14/732659104/retailers-ask-trump-to-stop-tariff-threats-on-china
Ben-Achour, S. (2016, March 11). Does trade kill jobs or create them? Yes. Marketplace. Retrieved from https://www.marketplace.org/2016/03/11/economy/election-2016-debates/trade-deals
PBS Newshour. (2013, March 21). Is globalization wiping out the American surfboard industry? [YouTube]. Retrieved from https://www.youtube.com/watch?v=DcF8hBpDBCE&t=18s
PBS Newshour. (2016, September 8). How one U.S. company is trying to surf the tides of foreign trade. [YouTube]. Retrieved from https://www.youtube.com/watch?v=dZwxKJEDlxk
Ryssdal, K. & Palacios, D. (2017, March 24). What people get wrong when they talk about NAFTA. Marketplace. Retrieved from https://www.marketplace.org/2017/03/24/world/nafta-explained/what- people-get-wrong-when-they-talk-about-nafta
• Samuelson, T. (2016, March 16). Are free trade agreements good or bad? Marketplace. Retrieved from https://www.marketplace.org/2016/03/16/world/pm-trade-poll