Beware politicians who blame China as the destroyer of American manufacturing — they’re just trying to protect their own hides. Take Democratic Rep. Timothy Ryan, who wrote in the Hill that manufacturers in his Ohio Rust Belt district are “not only competing with their counterparts in China — they are unfairly being forced to compete with the Chinese government itself.” He and other congressmen voted this week to support the “Currency Reform for Fair Trade Act” which would allow the Obama administration to raise tariffs on imports from countries that “manipulate” their currencies.
Such protectionist policy comes with its own perils. On June 17, 1930, President Hoover signed the Smoot-Hawley Tariff Act, which Congress intended to “provide relief” for “beleaguered farmers.” The act imposed the second-highest tariff rates in U.S. history, leading America’s furious trading partners to impose their own tariffs. This contributed to a 66 percent drop in U.S. imports and a 61 percent drop in exports between 1929 and 1933. Unemployment jumped from 7.8 percent at the time of Smoot-Hawley’s passage to 16.3 percent in the following year, on its way to 25.1 percent in 1933.
