Protectionism
trade policy is not simply about economic efficiency and instead must also accommodate deeper political and social aims.
A century later, a decisive shift back towards protectionism was seen with the notorious Smoot-Hawley Tariff Act of 1930. Confronted with the deepening crisis of the Great Depression, President Hoover imposed a 20% tariff on foreign imports. 14 In a desperate attempt to shield vulnerable domestic firms from the economic shock, the act proved internationally disastrous as other major powers, namely Britain and France, erected their own tariff walls. The result was a self-defeating cycle of protectionism that suffocated global commerce and caused world trade to fall by 66% only two years later. 15 Undermining of the foundation of global cooperation, the Smoot-Hawley Tariff Act has become a textbook illustration of the dangers of pursuing a protectionist approach in a globalized economy. However, the story of protectionism is not one of absolute failure. Having been credited with enabling rapid industrialization under certain circumstances, protectionist policies appear to still have a place on the economic stage. Japan’s use of subsidies and tax breaks following the destruction of World War II shows how these policies can shield infant industries in order to gain gradual exposure to competition. 16 Without the pairing of strict discipline and vast planning, however, such an approach would have entrenched inefficiency and the likes of Sony and Paramount would not have come about. South Korea has been seen to follow a similar path: its chaebols , such as Samsung and Hyundai, came about behind tariff walls and were supported by the state before they became the great exporters of today. 17 In such cases, protectionism was used as a development tool – albeit coupled with slow integration and firm government oversight. Protectionism in the modern era appears to have re-emerged as a more strategic instrument wielded in times of geopolitical rivalry. We only have to look at media headlines over the previous few months to find the clearest example. Donald Trump’s second presidency in 2025 saw the reimposition of sweeping tariffs on Chinese goods. In his initial term, Trump imposed tariffs on $350bn worth of Chinese manufacturing goods; 18 however, this time round advanced electronics were also included. Publicly justified as attempts to ‘rebalance’ the US’ trade deficit, such measures were an attempt to reduce America’s reliance on Chinese supply chains and reclaim leadership over sectors deemed critical for national security. Beijing’s response came in the form of retaliatory tariffs on American agricultural exports, as much as 140%, 19 and restrictions on rare minerals which are indispensable for global electronics and energy industries. The ripple effects of this structural confrontation have been substantial. Tariffs raise operational costs for firms, which often force them to relocate production,
14 Kelly, R. What Is the Smoot-Hawley Tariff Act? History, Effect and Reaction. https://www.investopedia.com/terms/s/smoot-hawley-tariff-act.asp. Consulted: 25/08/25. 15 Ibid. 16 Wikipedia Contributors. Ministry of International Trade and Industry.
https://en.wikipedia.org/wiki/Ministry_of_International_Trade_and_Industry. Consulted: 26/08/25. 17 Parkar, A. Chaebols of South Korea. https://etonomics.com/2022/06/07/chaebols-of-south-korea/. Consulted: 26/08/25. 18 Thompson, F. US and China hold first trade talks of Biden era. https://www.gtreview.com/news/americas/us- and-china-hold-first-trade-talks-of-biden-era/. Consulted: 27/08/25. 19 Bown, C. US-China Trade War Tariffs: An Up-to-Date Chart. https://www.piie.com/research/piie- charts/2019/us-china-trade-war-tariffs-date-chart. Consulted: 27/08/25.
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