ALTERNATIVE TRADE POLICIES



or other restrictions on imports. But few, if any, would want
to go to the opposite extreme and raise tariffs or other barriers
so as to eliminate foreign trade altogether. The recent report
of the President’s Materials Policy Commission points out that
the United States must import much larger quantities of raw
materials in the future than it has in the past even to maintain
our present output of goods. The real issue now facing the
United States is whether we should maintain a protectionist
policy with respect to items which might compete with goods
produced in this country or adopt what may be called a modified
free-trade policy. During recent years, the executive branch
of our government has tried to move in the direction of a'
modified free-trade policy. But legislation passed by our Con-
gress has, in many cases, conflicted with this objective. The
United States has been accused by other governments (quite
justly) of being inconsistent in its trade policy. While United
States delegates at international conferences have been expound-
ing the virtues of freer trade, some of our congressmen have
succeeded in piling on new import restrictions. Clearly, it is
time the American people made a clear-cut decision either for
or against reducing trade barriers.

CONSEQUENCES OF ALTERNATIVE TRADE POLICIES

In order to help reach a decision on this important issue,
let us examine briefly some of the consequences of following
each of the two major alternatives I have outlined, first a pro-
tectionist policy, and second a modified free-trade policy. Sup-
pose we increased our tariff rates and either maintained our
present quantitative restrictions on imports or added new ones,
what might be the result? One could be almost certain that
there would be an increase in trade barriers imposed by other
countries and a decline in the total volume of goods traded
internationally. If the United States increased its trade barriers,
other nations would probably retaliate by raising tariffs on such
items as American-made automobiles, typewriters, fountain
pens, electrical appliances, and textiles just as they did follow-
ing the passage of the Smoot-Hawley Tariff Act in 1930. This,
of course, would make it more difficult for United States manu-
facturers to sell their products abroad.

Even if foreign countries did not retaliate as they did in
the early thirties, United States producers of export commodi2

38



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