Work

The Smoot-Hawley Trade War

Year: 2021

Type: article

Abstract: We document the outbreak of a trade war after the United States adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested, with many eventually choosing to retaliate with tariffs. Using a new quarterly dataset on bilateral trade for ninety-nine countries, we show that U.S. exports to retaliators fell by 28%–32%. Using a second new dataset on U.S. exports at the product level, we find that the most important U.S. exports to retaliating markets were particularly affected, suggesting a possible mechanism whereby the United States was targeted despite most-favoured-nation obligations. The retaliators’ welfare gains from trade fell by 8%–16%.

Source: The Economic Journal

DOI: 10.1093/ej/ueac006

Authors: Kris James Mitchener, Kevin Hjortshøj O'Rourke, Kirsten Wandschneider

Institutions: Center for Economic and Policy Research, Santa Clara University, New York University Abu Dhabi, New York University, University of Vienna

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,938