 Good afternoon. I'm Jay Fidel. This is ThinkTech. And, in fact, it's the history lens with John David and of HPU, history professor there. And I'm honored to have him on the show. Thank you so much, John, for coming on. Thanks for having me, Jay. Today's discussion, which is really provocative to me, is Trump tariff on history lens. And the question is, will the Trump tariffs lead to war? And by that, we don't just mean a trade war. Wow. Right, right. Exciting. So how would you approach this question? Where do you start? You start historically, John? Yeah, well, first of all, I think we should start with the Trump tariffs themselves. And so it's a 25% tariff on aluminum, 10% tariff on aluminum. The other way. 25 on steel, 10% on aluminum. So on the face of it, that doesn't look too serious. But when you look at the history of tariffs, the Smoot-Hawley tariffs were really, it was like an extra, I think, 20% to 30% on products. But tariff rates were already very high. And there, we can see the history of tariffs. And you can see the... Very valuable. I mean, it's a very complex history. We're just going to do kind of a quick tour through this history. But you can see the tariff of abominations of 1828. We're going to cover that one. And then the Smoot-Hawley tariff in 1930. And then you can see in the period after World War II that tariffs really declined dramatically because the United States embarks upon internationalization of the economy. And the GATT tariff regime is set in place where countries negotiate tariffs at this organization. WTO was the extension of that. Enlightenment. Well, kind of, yes. I mean, it's an international economy. It's international capitalism. So international negotiation of tariffs simply makes sense. But does anything make sense in this environment? So on the face of it, these tariffs don't look that bad. But what will happen, of course, is retaliation. The European Union is going to retaliate. They've made it very clear they're going to retaliate unless they get an exemption. But in a theoretical way, from the beginning of, say, the country, how do tariffs work? They're a barrier. May I use the term wall? They're a wall. They require anybody importing goods from other countries to pay, sometimes prohibitively hide, taxes, essentially, on the importation of goods. They have an economic effect. And they have a diplomatic effect. Yes. Relations between nations. That's correct. Yes. So, yeah, I mean, tariffs are, you know, it's essentially an import tax. And it's a way of, well, the idea is, Trump's idea is to protect these industries, to protect especially the steel industry, and to try to regrow the American steel industry, which has been decimated over the last, since really, since the 1950s and 60s. What's interesting is that the chart you showed us, the first chart, is so interesting, because it's hard to, you tell me, but it seems to me hard to connect all those jumps that President or Congress made through the years of our history with legitimate factors that actually call for the tariffs. Yeah. It sounds like it's sort of, you know, I'm mad. I'm angry that other countries, since I'm going to punish them. It's sort of a punishment quotient. Yeah. It's honestly, I think, in the history of tariffs, what you have most often is tariffs as protection, not tariffs as punishment. So it's really not, I mean, the tariffs in the 19th century are really not about punishing any particular country. They're really about protecting American producers. And so I think that's what's going on here as well. Trump sees reelection, okay, the day after he was elected, he filed papers to run again and be reelected to a second term. So he's had, I mean, so this is domestic politics for Trump. And apparently, domestic politics resulting in tariffs that have international effect. Right. That's right. But Dan B, the international implications of the tariffs, it seems as though the Trump administration is taking that approach, even though there are many Republicans who say, no, this is a very bad idea. And economists universally say that, look, these tariffs, they might help, you know, there's what, 144,000 workers in the steel industry. You might add a few jobs to steel industry, but the industries that buy steel from other countries, those industries are going to see prices go up. And they're going to eliminate people. So on balance, the tariff will actually be a job killer, not a job creator like Trump is trumpeting it. Right. And the ones that continue to buy by paying the tariff, they're going to pass that additional expense off to the consumer and the economy in general. So we will wind up paying the tariff that he imposes. It's generally considered to be a drag on the economy. And that's part of why economists do not like it at all. No. Yeah. And in Smoot-Hawley, there was a statement historically for the proposition that it exacerbated the Great Depression. Yeah. Would you comment on that? Well, so how about we come to Smoot-Hawley a little later and let's go back to the beginning of tariffs. So interesting that there were actually a form of tariffs during the revolutionary period. The British had established, more than a tariff, actually, there were prohibited goods in terms of what could be produced within the colonies. So the American colonies had to import those goods that they were prohibited by the British Empire from producing. And this, of course, caused great damage to the American colonies, seemed to be very unfair. And so this is not a widespread or a common argument. There's a few historians who have argued that actually the American Revolution was partly to produce American industrialization and get out from under these terrible trade policies that the British had towards the colonies. I mean, I think that's a stretch. But you certainly can make the argument that the trade policies were damaging to the American economy, and Americans knew this. They understood this. Why am I thinking of the Tea Party in Boston Harbor? Right. Well, that's right. I mean, that's one of the issues, of course, is that there was an importation tax on tea. It was essentially a tariff on tea that was being imported into the American colonies. Now, the British themselves did not pay this tax. Yes, the American colonies did, because the British government wanted the American colonies to pay. They were still trying to get them to pay off for the Seven Years War, which would happen in the 1850s. So they're trying to apply all of these different taxes to the American colonies, and that's what happens with the tea, and look what happened there. It didn't work out very well for the British, so tariffs, historically, have been a very rough go if we look at the history in the 19th century. So after the United States becomes a nation, then immediately they put on tariffs. And tariffs are essentially the only form of consistent revenue for the new nation. There's no taxation, and they have debts to pay off. So the tariffs actually are effective in that way in producing revenue for the nation. And these tariffs stay in place until 1828, when you have the Whig Party in power, which is, I suppose, is a little bit like the Republican Party today. It's a kind of pro-growth and pro-economic development party. The Whig Party decides in 1828 to put on tariffs, to increase tariffs. And these tariffs become known as the tariffs of abominations, because they're deeply opposed by Southerners, especially Southern plantation owners, because Southern plantation owners, they don't produce a domestic crop. Their crop, the cotton crop, mainly goes to England. So it's not like they're being protected by any tariffs in this case. There's not an importation of cotton that would compete with the cotton that they're producing. But they have to pay more for tools that are produced elsewhere, shovels, basic kinds of tools that are used on the plantation that were being built in England. And so while the Northern Whigs like this policy, Southern plantation owners did not like this policy at all, especially in South Carolina, which was a hotbed of political radicalism already, where you had John C. Calhoun, who argued that the union is actually voluntary. And so what you end up with in South Carolina is threats of secession over the tariffs. The South Carolina legislature takes up a bill to secede. They never pass the bill, but they do pass what's called a nullification of the tariffs, saying that the federal government has no right to impose tariffs upon South Carolina. And South Carolina will... Yeah, we have a graphic on there. And so this is actually, as it plays out in those four years between 1828 and 1832, then you have this explosion taking place because of nullification, because it looks like South Carolina is, and in fact they are, denying the sovereignty of the federal government. And so this becomes a major challenge for President Andrew Jackson. You know what that sounds like? It sounds like the states, including especially California, who do not want to enforce the immigration laws coming out of Washington these days. And that case is pending in San Francisco. Yeah, yeah. Right now the federal government is sued. Well, there is this question of state versus federal sovereignty. And so South Carolina is set with this nullification and then Jackson threatens them. Jackson actually says, I'm going to send in the National Army if you do not abide by this tariff. There's a, you know, there's a potential for a big confrontation, cooler heads step in and South Carolina agrees to accept a tariff. The tariff is lowered by about, I think, 10 to 15 percent, so that's worked out. But it's interesting that it's connected to a very serious issue of secession and questions about the legitimacy of the union. So even the word abomination has a strong emotional charge to it. I didn't like it at all. Absolutely, yeah. So the 1828-1832 tariffs are a significant moment in the history of tariffs in the United States. And so, you know, you can imagine that tariffs are going to cause conflict and disruption in the economy. And it's really the next time when we look at tariffs seriously in the history of tariffs is during the Great Depression. I mean, there are several changes in the tariffs since then. I mean, you can see in the original graph we put up, the lines go up and down and up and down. But the 19th century is a century of tariffs. They might go up, but they're still in place. Typically, they exceed 50 percent of, yeah, of, yeah. Specific goods. Specific, usually manufactured goods, eh? Absolutely. It was an attempt to protect manufacturers in that time period. So they're very high tariffs. And then you have some conflict over tariffs in the early 20th century of, during the Taft administration in 1911, the Taft administration supported raising the tariff, Republican, the interesting anecdote or note on the side here, Republicans favored tariffs, Democrats were opposed to tariffs, Democrats were the party of farmers in the 19th century, farmers didn't like tariffs because the stuff that they had to buy went up in price. The same for the Souths, why they didn't like the abomination. That's exactly right. And of course, manufacturers who were generally, you know, wigs and then Republicans liked the tariffs because the tariffs protected their manufacturers. So the Taft administration passes tariffs. And the countries outraged at this, Roosevelt, Teddy Roosevelt, who was president, is outraged and decides to run against Taft in 1912, splits the Republican Party, Wilson wins, and lowers the tariff. So during World War I, the tariffs actually dropped pretty dramatically. So the Republicans take power in the 1920s again, raise the tariff, and then the stock market crashes in 1929. And the question is, what do you do? What do you do about tariffs? And the government, the Congress decides to pass a pretty severe tariff law. It's called the Smoot-Hawley Tariff Law, and if we can bring up Smoot and Hawley here, they're coming. Can you bring up the picture of Smoot and Hawley? There they are. So I think Smoot, Reed Smoot is on the left, and Willis Hawley is on the right. And these two guys conspired together to put together a tariff law, and it became known as the Smoot-Hawley Tariff Law, and it was adopted on March 13th. That's today, John. That's right. The famous anniversary. Today's the anniversary of Smoot-Hawley. Remarkable. Yeah, really. So the Smoot-Hawley Tariff Law was it probably produced more economic pain. It's a bit complicated in 1930, 1931, 32 when the law comes into effect, because the stock market crashes, and the government raises interest rates, and so economic activity really comes to a standstill. Between 1929 and 1932, industrial production is cut in half. I think we should commemorate that standstill now. I think we should take a one-minute standstill in celebration of memorialization of what happened then. We'll be right back after this one-minute break. We're back, and the standstill is over. So tell us what happened with Smoot-Hawley and the Great Depression. Right, right. So the United States is already going into a depression by the time Smoot-Hawley is implemented. And so it's—one could argue that it damaged the economy. On the other hand, the economy was already deeply damaged by a lot of other factors. So not necessarily true that Smoot-Hawley drove the United States into a depression. The thing is, if industrial production plummets by 50%, which it did between 1929 and 1932, then there's not a whole lot left to protect. So obviously there's other— Smoot and Hawley think that they would be resurrecting manufacturing in this country. So when it went down in 1929 and 1930, then Smoot-Hawley was an attempt to revive it. Yeah, that's absolutely right. The purpose of Smoot-Hawley was to try to bring the economy back. It didn't do that. No, it didn't do that at all. I think it probably pushed the economy—pardon me—into deeper trouble. But again, it's debatable as to how much deeper Smoot-Hawley pushed it into. But the other thing that happens in the 1930s is that the United States and then other countries become very economically nationalistic. They become islands. And the truth is that if Smoot-Hawley does anything, I think it promotes the isolation of the United States and other economies—the European economies, the Japanese economy—at a moment where those economies are quite fragile. And in turn, what happens is you have right-wing dictators who come to power promising to rebuild those economies after the damage of reduced trade overall. So this is the other part of the 1930s that I think is really significant, is that trade plummets in the 1930s on a worldwide basis. And I have a slide on this, if we can bring that up. There you can see. So 1929, you're at almost an index of 3,000, and it plummets by two-thirds then. And this is worldwide trade. Not just the United States, but in Europe as well. So what is—well, what looked like it was becoming a period of intense globalization and was, in fact, in the 1920s, from 1870 to 1920, then turns around completely and economies become isolated, policies become isolated. Without the—I'll call it binding glue, the binding glue of trade, then former friends become enemies. The trade, by the way, between the United States and Japan is a highly successful trade. Before. Before, but Smoot-Hawley contributes to it. So this is an environment that's perfect for war. I think that's what we're looking at. That's the argument I would make. The economists say, you know, it didn't have as much effect on the depression itself as we have thought. But the economists don't address the question of, did Smoot-Hawley create conditions that led to war? And I think you could, with the rise of economic nationalism, certainly economic nationalism is one of the conditions that leads to war. And this is what concerns me about the current Trump tariff, is it could be the beginning of something in which you have retaliation, in which economies become more isolated, in which warfare is more of an option. Let me give you a contemporary example, fairly contemporary. So in 2012, Japan and China had a tete-a-tete. They had a skirmish about the Senkaku Islands, which are south of Japan, not really that close to China at all, but China has claimed these islands in the past. So there was this tension between Japan and China. And when you looked at the trade between the two countries in that time period, trade was booming between Japan and China. When this happened, there was a drop-off in trade. But what you saw was the drop-off was temporary. It was for a month or two after a particular incident or set of incidents. And then trade came back incredibly strong. Economic activity between the two countries came back incredibly strong. And today, Japan and China, they're in trade talks. You have Chinese tourists going to Japan in record numbers buying Japanese goods. So in economic terms, things have never been better between the two. And I think, in its impart, the reason why things healed up so fast from the political tensions is because of the trade. Sure. It brings people together. Trade brings people together. And let me add that to a certain extent, the same thing has happened with respect to Taiwan. There's a fair amount of trade and interaction between Taiwan and China. And that takes the edge off the argument they've otherwise had. Right. So does free trade prevent war? That's an interesting question. We don't have time to answer that question. But I think it's possible that it is a buffer against the potential of tensions declining to the point where warfare becomes a real problem. That makes a lot of sense, John. So I know I have friends who disagree with me, who believe in tariffs. But I really think tariffs could lead us down to warfare, down the path of warfare, as they did in the 1930s. So, yeah, so and what you find then is after World War II, with the rise of international trading systems, then the potential for warfare between countries that are very important and trade partners has been reduced. It's a globalism helps. That's right. It's more than just trade. It's the whole interaction between nations. OK, enter Trump. Right. Now things are different because he doesn't know what we're talking about, and he is doing these... Well, he might. He might be watching. I hope so. Listen, Donald. Listen. So now we have a guy who may not know exactly how any of this works, but he takes the step of a huge increase in steel, which is very important, and aluminum, which is also very important, and he uses it as a bargaining chip or something. So where is all that going and what is the effect of that economically, diplomatically, and historically? So what we've seen since the end of World War II is the rise of internationalism and trade, and the commitment, at least in the West and among American trading partners, to increasing levels of free trade. Of course, that wasn't true in Soviet Russia or in their satellites, which there was trade between those, but there wasn't trade with the West from the Soviet Union and its allies. But so you see this increasingly open and free trade, but Trump, I think, refers to this as globalism, this idea that free trade, that you should be open to the rest of the world. And this is something that he's been pretty clear that he doesn't like globalism. In fact... He's an isolationist. Yeah. He resigned during that cabinet meeting when it was announced that Gary Cohen was resigning. Trump referred to him as a globalist, disdainfully. So I think it's pretty clear that Trump is not a globalist. And it's interesting that in a time... Now, in the 1930s, when tariffs went up and when economies became nationalistic, of course, this was a time of great deprivation, I mean, unemployment of 25%, you know, trade dropping dramatically, industrial production dropping dramatically. So great time of great deprivation. The present is not the same. We're not in a time of great deprivation. So one would ask the question, does the country, does the majority of Americans actually support the idea of tariffs? And do we, in fact, need them? Well, I think, yeah, I think it's pretty clear from most economists that these tariffs will do some damage to the economy, to our economy. But so it's interesting to me that he might be completely... The Trump administration actually might be completely out of sync with what most Americans actually want. In fact, I think there's a very good chance of that. So the results, I'm not sure that if that's true, if Trump is really out of sync with the majority of Americans on the issue of tariffs, then it's quite possible that these tariffs will be pretty short-lived. Knock wood. Yeah, that a new administration will reverse these pretty quickly or cut them down, leave them in place, but leave them at a very low level. But meanwhile, after spending a year alienating our allies all over the world, he's further alienated them, including some very important allies with these tariffs. He's accepted some, which further aggravates the relation with others. Right, that's right. Yeah, so the winner-loser idea, that's totally in opposition to the rules of the World Trade Organization. And the other, there's something else here. And that's that with Trump wanting to negotiate bilateral trade deals, the Trump administration will have to go to the WTO to get exemptions on the trade rules that are in place for the globe. And if Trump gets exemptions for things that are, well, some of these are claimed to be national security exemptions, which is ridiculous, they're not national security exemptions. If he gets national security exemptions for things that are patently not national security, then the question is, what happens when the United States actually needs to use an exemption for national security purposes? Who actually limit trade for the purpose of national security. So he's moneyed the water- It's the boy who cried wolf. He's moneyed the water in terms of the World Trade Organization as well, and in terms of the function of the World Trade Organization. I suspect Donald Trump would like to see the WTO abandoned, dismantled. He hasn't said that, but I think if, you know- As well as all these other trade organizations around, these trade agreements around the world, he's abandoned them. So the question is, really, I mean, it's a very provocative thought, that what happened in the 30s created a more unfriendly world, a world that was more isolated, where countries were more detached, where economic barriers have been put up, which led to the kind of animosities that translated into war. Are we headed there now? Is this going to take us there? Well, the thing is, the economic nationalism was not the only thing that led to warfare, but if economic nationalism was a part of the road to war and chaos by the end of the 1930s, then I don't- the comparison of the 1930s is not perfect, because we're not in a great depression right now. We're actually in a very high economy right now, so- Suppose that changes. Well, if, okay, there you go. If it changed, if we had a crash, a bad crash, then it's quite possible that tariffs might look much more attractive, widespread tariffs, and attractive to other countries, widespread tariffs. Not only steel and aluminum. Right, but all kinds of- Not only the United States. All kinds of products, and then you have the development of isolated economies, then I think the chances of war do increase. Yeah, yeah, so I guess one of the pros and cons real quick, we were almost out of time, the pros and cons of changing these tariffs, of knocking off the tariffs that Trump put in force a couple of weeks ago. Well, again, I think tariffs are a bad idea. I mean, I have friends who will disagree with me, but I think tariffs are a bad idea because of what we were just talking about, because they can produce or even or exacerbate tensions between countries. And so I think getting rid of them is a pro, and keeping them as a con. How's that for a quick answer? Well, we have to revisit this whole issue because it's in play, John, as so many things are. And who knows what kind of bargaining chip it will turn into going forward. We live in a time when the news is immediate and it's every day, and the first 20 articles of every New York Times newspaper are about Trump, sadly. That's right. Thank you so much, John, David, on the HP of historian par excellence.