GRADE 7 SOCIAL STUDIES

Week 7: The Global Trade War

Tariffs, Protectionism, and the Smoot-Hawley Disaster

Imports

Goods that come **into** our country from another country (e.g., French cheese, Japanese cars).

Exports

Goods that **leave** our country to be sold in another country (e.g., American wheat, Canadian lumber).

Trade is essential for a healthy economy!

1. The Basics of International Trade

After the stock crash, unemployment soared. The government decided to "protect" American jobs.

Tariff

A **tax** placed on imported goods (goods coming from other countries).

Protectionism

Using tariffs to make foreign products so expensive that consumers are **forced** to buy the slightly cheaper domestic goods.

2. Defining Protectionism

The U.S. government passed a law that raised tariffs on over 20,000 imported goods to try and save U.S. jobs.

Intended Goal:

Increase demand for American-made goods by making foreign alternatives too expensive.

3. The Smoot-Hawley Tariff (1930)

The world did not like the U.S. building a trade wall.

The U.S. stopped buying their goods, so they stopped buying our goods (especially American farm products).

U.S. Taxes Imports (Tariffs)

Other Countries Tax U.S. Exports

4. The Disaster: Foreign Retaliation

Global Trade Collapsed

Because every country raised its trade barrier, international trade dropped by **66%** in three years.

The U.S. lost more jobs due to the collapse of its export industries (like agriculture) than it gained by protecting domestic factories.

The world market shrunk dramatically.

5. The Failure of Isolation

The key lesson: Focusing only on domestic self-interest can destroy the entire global economic system.

Inquiry Focus

Your assignment requires you to think about what the government should have done at home (domestically) instead of starting a fight abroad.

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Fix the banks?

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Help the unemployed?

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Support the farmers?

Assignment Prep: The Alternative