The Smoot-Hawley Trade War Flashcards

A set of vocabulary flashcards based on the lecture notes regarding the Smoot-Hawley trade war, identifying key economic theories, legislation, and quantitative impacts.

Smoot-Hawley Tariff

U.S. legislation signed by President Herbert Hoover on June 17, 1930, which raised the average U.S. tariff on dutiable imports by approximately $6$ percentage points.

Trade War (Conybeare definition)

A category of intense international conflict where states interact, bargain, and retaliate primarily over economic objectives related to traded goods or services, using restrictions on the free flow of goods.

Retaliation

The act of a country raising trade barriers specifically as a response to another country's policy actions rather than for purely domestic reasons.

Responders

The group of U.S. trade partners that either filed official protests against the Smoot-Hawley bill and/or imposed retaliatory tariffs after its passage.

Threateners

A subset of responders representing $43\%$ of total U.S. trade in $1928$ that filed official petitions with the U.S. State Department but did not impose formal retaliatory tariffs.

Retaliators

U.S. trade partners, such as Canada, France, Italy, and Spain, that imposed specific duties or trade restrictions in direct response to the Smoot-Hawley tariff.

Strategic Targeting

A mechanism where countries bypass MFN obligations by raising tariffs on products disproportionately supplied by a specific partner, such as the targeting of U.S. automobiles.

Lerner Symmetry Theorem

A theoretical principle suggesting that the Smoot-Hawley tariff, by its nature, should have reduced American exports as well as its imports.

Fordney-McCumber Tariff

A $1922$ act that resulted in a sharp increase in U.S. protection, particularly for industrial goods, leading to later calls for higher agricultural tariffs.

Wais Tariff

A retaliatory measure adopted by Spain on July 23, 1930, that targeted automobiles, tires, and motion picture equipment predominantly imported from the United States.

Most-Favored-Nation (MFN) Obligations

International agreements requiring non-discriminatory trade treatment, which countries in the $1930s$ circumvented using quotas or product-specific tariff increases.

Structural Gravity Model

An empirical tool used by the authors to estimate that U.S. exports to retaliators fell by between $28\%$ and $32\%$ during the trade war.

ACR Formula

A welfare measurement method by Arkolakis, Costinot, and Rodriguez-Clare based on domestic trade shares and the elasticity of trade.

FJL Modification

A refinement of the welfare calculation by Felbermayr, Jung, and Larch that incorporates a tariff multiplier ($\mu_j$) to account for revenue and price effects of protection.

Tariff Multiplier ($\mu_j$)

The share of aggregate tariff revenue in aggregate income, used in welfare calculations to evaluate the impact of trade shocks.

Trade Elasticity ($\epsilon_\tau$)

The positively defined elasticity of imports relative to domestic demand with respect to iceberg trade costs, set at $8.0$ for the interwar period analysis.