Question

1) How would you characterize US trade policy since the Great Depression of the 1930s? Reinforce your argument with concrete examples of US trade policy.

Answer 1

Introduction:-

The great depression of the 1930s started officially after the crash of the stock market in October 1929.This sent Wall Street into a panic and wiped out millions of investors from the market.

Over the next several years, consumer spending and investment dropped, which caused a steep decline in the industrial output and employment as failing companies laid off their workers.

By end of 1933, when the Great Depression reached its lowest point, some 15 million Americans were unemployed and nearly half the country’s banks had failed.

The trade policy of the United States widely changed after the Great Depression to incorporate a method of Free Trade, and lesser intervention in the markets, it allowed for the producers to decide what to produce on the basis of the profits which they were to make.

Examples:-

1) Reciprocal Tariff Act-

This law was signed in the year 1934 by then President Franklin Delano. It authorised the president, to negotiate reciprocal trade agreements between the US and other nations. Tariffs were reduced with 21 countries representing 60% of total US trade.

2) General Agreement on Tariffs and Trade (GATT).The US and 22 other countries signed GATT, a multilateral agreement, in the aftermath of World War II in 1947. It served as the main framework for global trade negotiations for several decades. It was an agreement that helped an allowed in free trade between participating countries. This was the foundation for World Trade Organisation that later came into effect.

3)Trade Act 1974

This measure aimed at the reduction of nontariff barriers(Nontariff barriers include quotas, embargoes, sanctions, levies and other restrictions) also as addressing domestic concerns of US industries that were hurt by international competition. It was aimed to provide "adequate procedures to safeguard the American industry and labor against unfair or injurious import competition."

4) World Trade Organization (WTO). The WTO was established in 1995, replacing GATT. Additionally, there was an uptick in free trade agreements in the post-Cold War era, including the US-Canada Free Trade Agreement, the North American Free Trade Agreement (NAFTA), the South Korea and US Free Trade Agreement, and the Trans-Pacific Partnership (TPP), the last of which the US exited in January 2017. The percentage of imports that are subject to tariffs dropped from 65% in 1990 to about 30% today.

The above examples, thereby highlight how USA has transformed over the decades, since the Great depression of the 1930's into becoming a free market economy which is highly not controlled by the Government but rather encourages to engage in free trade and commerce thus keepind demand and supply in check.