key term - Trade tariffs

Definition

Trade tariffs are taxes imposed by a government on imported goods, making them more expensive compared to domestic products. These tariffs aim to protect local industries, generate revenue for the government, and influence trade balances. During the period of economic recovery and the 'Roaring Twenties', trade tariffs were significant as they impacted international trade dynamics, consumer prices, and the overall economic landscape of nations.

5 Must Know Facts For Your Next Test

1. In the early 1920s, many countries implemented high tariffs to protect their recovering economies after World War I.
2. The Fordney-McCumber Tariff Act of 1922 raised tariffs significantly in the U.S., which was intended to support American farmers and manufacturers.
3. High tariffs can lead to retaliatory measures from other countries, impacting global trade relationships.
4. During the 'Roaring Twenties', the U.S. experienced economic growth partly due to protective tariffs that shielded local industries from foreign competition.
5. Despite their short-term benefits for local industries, high trade tariffs contributed to reduced global trade, which became especially problematic during the Great Depression.

Review Questions

• How did trade tariffs contribute to the economic recovery in the aftermath of World War I?
  • Trade tariffs played a crucial role in the economic recovery following World War I by protecting domestic industries from foreign competition. By imposing tariffs on imported goods, countries aimed to encourage consumers to buy local products, thus stimulating production and employment. This protectionist approach helped stabilize economies as nations sought to rebuild and grow after the disruptions caused by the war.
• Evaluate the long-term effects of high trade tariffs on international relations during the 1920s and into the 1930s.
  • High trade tariffs during the 1920s led to strained international relations as countries retaliated against each other with their own tariffs. This cycle of protectionism resulted in a significant decline in global trade, which contributed to economic instability. The enactment of laws like the Smoot-Hawley Tariff in 1930 exemplified this trend, as it triggered widespread retaliation that exacerbated the Great Depression and created tensions between nations.
• Assess how the implementation of trade tariffs during the 'Roaring Twenties' shaped both economic policies and public sentiment toward foreign goods leading into the Great Depression.
  • The implementation of trade tariffs during the 'Roaring Twenties' significantly shaped economic policies by fostering a climate of protectionism that prioritized local industries over international trade. Public sentiment shifted toward viewing foreign goods as threats to American jobs and industries, reinforcing support for high tariff policies. As the economy began to falter in the late 1920s, these protective measures came under scrutiny as they contributed to declining international trade relationships, ultimately leading to further economic hardship during the Great Depression.

Related terms

Protectionism:

An economic policy aimed at shielding domestic industries from foreign competition through tariffs and other trade barriers.

Smoot-Hawley Tariff: A U.S. law enacted in 1930 that raised tariffs on numerous imports, contributing to a decline in international trade and worsening the Great Depression.

Trade Balance: The difference between the value of a country's exports and imports, which can be influenced by trade tariffs.