Question #1: Is economic nationalism justified?

Economic nationalism is not justified and is disadvantageous to both the country which practices

it and foreign countries which would benefit from trade with that country. Economic nationalism is a set

of trade policies which seek to keep jobs and investments inside the borders of a country. Most notably

practiced by the United States after the economic crashes of the Great Depression in 1929 and the

recession of 2008-2009 (Gaspar, 2017). During the 2008-2009 recession, the United States implemented

the American Recovery Reinvestment Act. The act pushed a stimulus of $787 billion into the United

States economy to encourage spending in a bid to reinvigorate the economy. The stimulus package,

amounting to 4% of America’s GDP, was the largest in U.S. history and shadowed the stimulus provided

in any year by Franklin Roosevelt’s New Deal (“The Big Promise”, 2012). The act included a provision to

“Buy American” which required the government to only purchase goods from U.S. companies. This

inflated the costs of many public works projects, as iron and steel was much more expensive in the U.S.

than China. The economic nationalistic policies practiced by the United States after the 2008 recession

showed to be a failure.

Question #2: is the Smoot-Hawley plan better or worse than “Buy American”? “Buy Spanish”? Or “British
jobs for British workers”? Explain fully.

The “Buy American” policies implemented after the 2008 recession are a revisiting of the same

set of economic nationalistic ideas that led to the creation of the Smoot-Hawley Tariff Act of 1930.

During the Great Depression the United States implemented strict tariffs on over 20,000 imported

goods, through the Smoot-Hawley Tariff act, which discouraged U.S. consumers from purchasing goods

from foreign countries (Stewart, 2018). The intent of this act was to strengthen the United States

economy by keeping jobs in the United States. The plan resulted in a trade war between the United

States and its trading allies, as they retaliated with strict tariffs of their own. The foreign tariffs caused by

the Smoot-Hawley Tariff act lowered United States exports by a drastic 61 percent (Stewart, 2018). The

myriad of restrictive tariffs were repealed in 1934. The Smoot-Hawley act and the “Buy American” policy
were similar in their intent to support the United States economy by fueling domestic purchases.

Although they were both failures, the Smoot-Hawley act was a more disastrous policy due to its harsh

effect on the United States exports.

In the last few years there has been a re-emergence of economic nationalistic ideas. On the campaign

trail, President Donald Trump spouted rhetoric of how, when elected, he will “Keep America First”

(Witte & Birnbaum, 2018). In a little over a year, President Trump has done a great deal to isolate

America from growing foreign economies. He has threatened to leave the North America Free Trade

Agreement (NAFTA) prompting the countries involved in the treaty (Canada and Mexico) to look

towards other countries as trading partners. Due to America’s enforcement of levies on aluminum and

steel, Mexico has imposed the United States with tariffs on around $3 billion of American pork, steel,

and cheese (Swanson & Tankersley, 2018). American policy makers must urge the President to make

wiser decisions regarding the United States Economy. Before implementing more economic nationalistic

policies, America’s leaders should look to history and see how the previous policies such as the Smoot-

Hawley Tariff act and “Buy American” have failed.

The big promise. (2012, August 18). Retrieved from https://www.economist.com/node/21560529

Gaspar, J. E. (2017). Introduction to global business: Understanding the international environment and

global business functions. Boston: Cengage Learning.

Stewart, J. B. (2018, March 08). What History Has to Say About the 'Winners' in Trade Wars. Retrieved
from https://www.nytimes.com/2018/03/08/business/tariff-trump-trade-wars.html

Swanson, A., & Tankersley, J. (2018, June 05). Trump Signals He Wants Separate Trade Deals With
Canada and Mexico. Retrieved from https://www.nytimes.com/2018/06/05/us/politics/trump-trade-
canada-mexico-nafta.html

Witte, G., & Birnbaum, M. (2018, January 20). A year of Trump's 'America first' agenda has radically
changed the U.S. role in the world. Retrieved from https://www.washingtonpost.com/world/a-year-of-
trumps-america-first-agenda-has-radically-changed-the-us-role-in-the-world/2018/01/20/c1258aa6-
f7cf-11e7-9af7-a50bc3300042_story.html?noredirect=on&utm_term=.ad49671282c4