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POLI 354 (26)
Chapter 17

Power Money and Trade - Chapter 17

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McGill University
Political Science
POLI 354
Mark Brawley

Chapter 17 Brawley The Passage of the SmootHawley Tariff The Trade Regime After World War Iy Just as monetary relations were upset by WW1 so too were trade patterns countries implemented more protectionist trade policies Each country tried to manipulate its international trade and payments to aid its own war effortprotectionist policies y US who was opening up for free trade at the time had just enacted its Underwood Tariff lowest tariff to that date But due to the increased tariffs of European nations they started to raise their tariffs again y The European combatants raised tariffs on industrial goods due to the war but most were eager to import food and thus the US exports of agrarian goods increased dramatically during the war y However when the war ended European states tended to keep their tariffs on industrial goods and started to protect agriculture in order to shift back to prewar conditionsnormal production y Also new central and eastern European states emerged after the war and they were all ambitious to develop their industrial base and thus enacted high tariffs to protectnurture their local firms y The US was concerned by the postwar increase in tariffs in Europe and thus responded by raising their tariffs as well y The problem was that during the war the European powers who had previously dominated the international market now had raised tariffs and pursued protectionist policies which freed up the international market Other countries developing countries saw that there was decreasedlittle competition in the international market and they seized this opportunity to access the international market and develop their industries o PROBLEM After the war the European countries wanted to claim back their old markets but faced resistance from those who now considered those markets their own y In the 1920s agricultural goods flooded international markets and prices dropped ridiculously low that many farmers were driven out of business and even the US which had a comparative advantage in land started importing agricultural goods y 1929 stock market crashed farmers seeked protection and so did other sectors of the economy
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