Anyone who has ever taken a history class in middle school and maybe even elementary school, knows about The Great Depression in some aspect. Because people were putting so much into stocks and not working, unemployment rose, and production was declining – leaving the stock prices higher than their actual value. This lead to what is known as, “The Great Depression” – the worst economic decline in history. Trade wars were part of this as well due to the rising, then demeaning, cling of the world’s value on certain things which leads to tensions.
Individuals of all walks of careers were putting everything into stocks and therefore the stock market expanded rapidly. “By then, production had already declined, and unemployment had risen, leaving stock prices much higher than their actual value…The American economy entered a mild recession during the summer of 1929, as consumer spending slowed and unsold goods began to pile up” which made production slower (Great Depression). This then lead to the stock market crash of 1929 – “black Tuesday.”
What does this have to do with trade wars though? According to Julia Horowitz, “[a] trade war is one potential result of protectionism. It describes a situation in which countries retaliate against a country that imposes trade barriers such as tariffs and quotas” which can start global tensions (Horowitz). 
Trade protectionism, as stated above, is a policy that puts restrictions on one-sided competition from foreign industries. Obviously, politically motivated for defensive and can make the industries of that country less completive in international trade. According to an article on trade protectionism, “[t]he most famous example is the Smoot-Hawley Tariff of 1930” which was designed to protect farmers from the agricultural imports of Europe. However, when the bill was in Congress, “it had slapped tariffs on many more imports” (Amadeo). Thus, creating tensions on a global scale by having other countries retaliate and “[t]he resultant competitive trade war restricted global trade” and was one of the reasons for the harshness of the Great Depression (Amadeo).
Trade protectionism weakens industries in the long run because without competition, industries have no innovation and therefore, the product will decline in quality. The advantage to this is that “[i]f a country is trying to grow strong in a new industry, tariffs will protect it from foreign competitors. That gives the new industry’s companies time to develop their own competitive advantages” – creating jobs (Amadeo).
Unfortunately, in the time of the “roaring twenties” and so on, this happened in the worst way since the quality of goods were declining and no one wanted to buy from the U.S. – thanks to the Smoot-Hawley raising tariffs on many products. Could it have been prevented? More than likely, but it’s something to keep an eye out now. Moreover, the Great Depression and trade wars go hand in hand and will always have a lasting effect on the economy, and the world itself. Such a massive effect that everyone knows what steps that we need to take and what to look out for.
Amadeo, Kimberly. “Why Protectionism Feels So Good, But Is So Wrong.” The Balance, The Balance, 11 June 2018, www.thebalance.com/what-is-trade-protectionism-3305896.
History.com Staff. “Great Depression.” History.com, A&E Television Networks, 2009, www.history.com/topics/great-depression.
Horowitz, Julia. “What Is a Trade War? And All Your Other Questions, Answered.” CNNMoney, Cable News Network, 3 Mar. 2018, money.cnn.com/2018/03/03/news/economy/trade-war-tariffs-explained/index.html.
