What if Tarriffs to Protect the US Manufacturing Base Were Imposed in the 60s/70s?

RousseauX

Donor
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So in Mexico, 23.3% of household expenditures are for food, vs 6.5% of the USA

So while it sucks for Mexican Farmers, the rest of Mexico would spend less of their budget on Food, say if they get their costs to twice that of the USA, 13% by large amounts of imported Food.

That frees up 10% of their budget for other goods or services, and that makes for a good hit of growth in the economy, meaning jobs would be open for those Mexican Farmers who can't make ends meet with 10 acres of Corn.

And back in the USA, that Farmer is getting about 5 cents for the product in a box of Breakfast Cereal.
Not a lot, he makes it up on volume, and on subsidy payments, when Corn prices are low


Most tariffs on american foods were already gone though.
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Source
 
US cities in the Rust Belt would still lose a lot of industrial jobs to in-country outsourcing to the South, and to automation. A bit less deindustrialization than OTL but not a massive amount.

If the tariffs become permanent US policy and the rest of the world follows suit things will be quite different. Probably a lower global GDP, possibly less income inequality within countries but as much or more income inequality between countries. Some places would be richer than OTL, more would be poorer. There'd be quite a bit less international shipping.

I don't see why more tariffs would save the Manchurian industrial base: Chinese factories will still (more slowly) grow to feed the internal market, and a lot of the new industry will probably grow up in South China as in OTL.
 
Something I didn't consider right now and don't know enough to say for sure: would Latin American countries with Import Substitution Industrialization strategies do better in a more protectionist 1970s and 1980s? They'd still have problems with oil price spikes and foreign debt, but maybe the general model would work better when the alternative isn't as available?

Meanwhile the "Asian Tiger" nations (Taiwan, South Korea, Japan) would do less well with their "Export-Push" strategy. I think they would still have decent economic growth, due to agricultural reform, demographic dividend and rising education levels. Just not as much as OTL.

What the effect would be on African nations I'm not sure. Unfortunately there'd probably be a lot of post-colonial dictators and Cold War proxy conflicts screwing up the continent as IOTL. Maybe nascent industrial sectors (Nigerian textiles?) would do better in a world where the foreign competition is pricier? OTOH things like agricultural/industrial equipment and medicine would be harder to get from foreign countries too. African nations might be better or worse off depending.

I imagine this would be good for the USSR, as Western Europe would be pissed at the US over the tariffs and the capitalist countries would generally have lower GDPs to compete with.

TBH this might be a decent timeline to write if there's a good PoD to make the US turn staunchly protectionist in the late '60s or early '70s. I can't really think of one though, that Bretton Woods consensus was really entrenched.
 
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Mexico has roughly 20% of their workforce in agriculture, mostly in tiny farms.
You have to go back to the 1930s for a similar percentage in the USA, that is at 2% today

What will happen is what did in the USA, Farmers will have to move to where the jobs are, just as what happened in every other modern economy.



Isn't heavily subsidizing your country's crops and products in general creating a bubble when/if the government decides to quit giving them free money? Also, it could be seen as "cheating" and unfair. The main point of contention seems to be :How efficiently and painlessly will farmers transitioning from farm to X sector be for them? If I recall correctly, most of the time, this has not happened so quickly or painfully.
 
TBH this might be a decent timeline to write if there's a good PoD to make the US turn staunchly protectionist in the late '60s or early '70s. I can't really think of one though, that Bretton Woods consensus was really entrenched.


Reading New Deal Coalition Retained and this somewhat happens. In 1965 or so, a protectionist bill against German and Japanese industries is passed (spoiler image and quote ahead)






Spoilers ahead








Wallace’s approach was three fold. Echoing the past traditions of populists such as William Jennings Bryan, he unilaterally abolished the gold standard as a measure of propping up the US Dollar, establishing a fiat currency instead. Second, a series of wage and price controls was established via a congressionally-authorized FDR-style government board to ensure the rate of inflation was slowed. Third, to rejuvenate American manufacturing – on a steady decline thanks to cheaper goods from the booming German and Japanese sectors – the ardently protectionist and economically nationalist Wallace pushed for a new bill that would serve as a “Shield and a Kitchen” for embattled US industry. The Industrial Protection and Investment Act (IPIA) passed the House by a margin of 234-197 and the Senate 52-45 to be signed on Labor Day 1969.

Combining a series of government subsidies to struggling industries (including generous concessions to labor unions) that was implemented by Secretary of Public Works George P. Mahoney with a repeal of the largely pro-trade policies of the last four decades with a general tariff levy on foreign manufactured goods such as vehicles, electronics, and steel to name three, despite dire warnings of economic pitfalls from economists like Friedman and officials such as Senator George H. W. Bush and NYC Mayoral Candidate William F. Buckley the effects seemed positive. Inflation and unemployment stabilized by the fourth quarter of 1970, and it seemed as if the United States had ridden out the storm better than the monetarist governments in Australia and Britain.

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RousseauX

Donor
Something I didn't consider right now and don't know enough to say for sure: would Latin American countries with Import Substitution Industrialization strategies do better in a more protectionist 1970s and 1980s? They'd still have problems with oil price spikes and foreign debt, but maybe the general model would work better when the alternative isn't as available?
why? the problem is that they were running out of money to subsidize their industries, not other countries trading with each other more freely
 
I've read stuff saying that the American city went to Sh!t because of the manufacturing jobs were offshored in the 70s and 80s. Would tarriffs have helped?
Protect them of what? Japan and Europe were still rebuilding and USA was too damn ahead, as other say, better management and workers-businessmen relationships would have improved far better the country.
 
Protect them of what? Japan and Europe were still rebuilding and USA was too damn ahead, as other say, better management and workers-businessmen relationships would have improved far better the country.


Yeah, my inital impressions are pretty far off considering the replies I got here.
 
Yeah, my inital impressions are pretty far off considering the replies I got here.
When come 80's if we got better management and unions are not a joke and friendly with businessmen, you can preempt any japanese cars thanks to a market already full of local cars improved for home market, some might break but not enough, ditto all the other heavy industry.
 
Isn't heavily subsidizing your country's crops and products in general creating a bubble when/if the government decides to quit giving them free money? Also, it could be seen as "cheating" and unfair. The main point of contention seems to be :How efficiently and painlessly will farmers transitioning from farm to X sector be for them? If I recall correctly, most of the time, this has not happened so quickly or painfully.

Putting it off, as Mexico did by import tarrifs and more than just subsidies

up the end of the oil boom and the debt crisis of 1982/3, state intervention
in agriculture included: crop price supports to staple producers; subsidies to agricultural inputs,
credit and insurance; and government participation in the processing of grains, oils and powder
milk. The Mexican state had also retail shops to sell basic foods to the rural and urban poor; was
involved in the production of fertilizer and improved seeds and in granting consumption food
subsidies to the poor.

After the macroeconomic crisis of 1982, the de la Madrid administration (1983-1988) began to
adopt policy reforms. During the eighties, producer price supports of five out of the twelve basic
crops were eliminated (those of copra, cotton, suflower, sunflower and sesame seed), and
CONASUPO (the National Company of Popular Subsistence, Mexico's major state enterprise
involved in agriculture, in charge of price supports) was subject to an administrative
reorganization in order to reduce its administrative costs (see CONASUPO: 1986, 1988 and
1989). During its first two years of government, the Salinas administration (1989-1994) reduced
CONASUPO’s participation in the oilseeds markets, eliminated the generalized consumer
subsidies for wheat bread and changed the subsidies given to maize “tortillas” (Yañez-Zazueta:
1997). In addition, all State enterprises began to be privatized or eliminated


So Mexico missed what every other advanced economy had gone thru before 1930, Farmers finding that unmechanized farming couldn't compete with larger fully mechanized Farms. They delayed the pain.

Their small Farmers got guaranteed prices for their crops, plus subsidized prices for supplies, totally disconnected from the World Market, thanks to over 200% tariffs on those Staple crops, and were paying in effect, over 45% of World price for Corn. That Chart I had upthread on food costs looked a lot worse in the '70s, Mexico was around 40% of budget, even with those subsidies.

System crashed finally after Oil Prices plummeted after the 2nd Oil Shock, PEMEX couldn't prop up all of Mexico's spending on CONASUPO. They really had no choice but to agree to a NAFTA, so the more profitable crops, like Avocados could be sold in the USA

It costs real money to 'Cheat' with subsidies. Mexico ran out of Pesos to be able to cheat any longer by 1990
 
Putting it off, as Mexico did by import tarrifs and more than just subsidies

up the end of the oil boom and the debt crisis of 1982/3, state intervention
in agriculture included: crop price supports to staple producers; subsidies to agricultural inputs,
credit and insurance; and government participation in the processing of grains, oils and powder
milk. The Mexican state had also retail shops to sell basic foods to the rural and urban poor; was
involved in the production of fertilizer and improved seeds and in granting consumption food
subsidies to the poor.

After the macroeconomic crisis of 1982, the de la Madrid administration (1983-1988) began to
adopt policy reforms. During the eighties, producer price supports of five out of the twelve basic
crops were eliminated (those of copra, cotton, suflower, sunflower and sesame seed), and
CONASUPO (the National Company of Popular Subsistence, Mexico's major state enterprise
involved in agriculture, in charge of price supports) was subject to an administrative
reorganization in order to reduce its administrative costs (see CONASUPO: 1986, 1988 and
1989). During its first two years of government, the Salinas administration (1989-1994) reduced
CONASUPO’s participation in the oilseeds markets, eliminated the generalized consumer
subsidies for wheat bread and changed the subsidies given to maize “tortillas” (Yañez-Zazueta:
1997). In addition, all State enterprises began to be privatized or eliminated


So currently to what extent does mexico subsidize their farmers versus the US currently?

Sure, Mexican agriculture was inefficient and heavily subsidized in the 1980s no denying that. But is letting your market be flooded with heavily subsidized crops 5 years with no tariffs after you started to improve the farming industry going to help you out?
 
So currently to what extent does mexico subsidize their farmers versus the US currently?

As the NAFTA talks were underway, they had a agency, PROCAMPO,now called PROAGRO, its a per hectare direct payment program and a few other programs that provide Grants and gradually replaced the Tariffs and price floors. Still around, it's part of that 23% here. Other subsidies are in that 22% bit of the pie
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The USDA has a $151B budget. It's that same as that game of 'Deep Pockets' the USA played with the USSR. Mexico just doesn't have deep enough pockets to subsidize the way they had in the past, when both USA and MX had high trade barriers up.

Sure, Mexican agriculture was inefficient and heavily subsidized in the 1980s no denying that. But is letting your market be flooded with heavily subsidized crops 5 years with no tariffs after you started to improve the farming industry going to help you out?

They pretty much had no choice. While Mexico now takes around 12% of US crops, they export over 75% of all their Ag products to the USA. They needed the Market access to sell something. The way I see it, they avoided what is now going on in Venezuela, who subsidizes gasoline to citizens to where it's a fraction of the cost of bottled water, and gives away much of the rest to their Leftwing compatriots, than selling on the World Market. Between Politics and Trade Policy, they wrecked their country in 20 years

Mexico tried the Autarky way at first too, and were self sufficient for crop basics, but Mexico just doesn't have a big enough economy to have continued that policy once the WTO and the rest of Globalization got going in the '70s

They played the King Canute and yelled at the tides for 20 years. Keeping 20% of your workers in just above subsistence farming was going to fail. They just delayed it longer than than any other developed country I can think of. But they decided to stop yelling at the Tides and did a deal with the USA and Canada
 

kernals12

Banned
Something I didn't consider right now and don't know enough to say for sure: would Latin American countries with Import Substitution Industrialization strategies do better in a more protectionist 1970s and 1980s? They'd still have problems with oil price spikes and foreign debt, but maybe the general model would work better when the alternative isn't as available?

Meanwhile the "Asian Tiger" nations (Taiwan, South Korea, Japan) would do less well with their "Export-Push" strategy. I think they would still have decent economic growth, due to agricultural reform, demographic dividend and rising education levels. Just not as much as OTL.


What the effect would be on African nations I'm not sure. Unfortunately there'd probably be a lot of post-colonial dictators and Cold War proxy conflicts screwing up the continent as IOTL. Maybe nascent industrial sectors (Nigerian textiles?) would do better in a world where the foreign competition is pricier? OTOH things like agricultural/industrial equipment and medicine would be harder to get from foreign countries too. African nations might be better or worse off depending.

I imagine this would be good for the USSR, as Western Europe would be pissed at the US over the tariffs and the capitalist countries would generally have lower GDPs to compete with.

TBH this might be a decent timeline to write if there's a good PoD to make the US turn staunchly protectionist in the late '60s or early '70s. I can't really think of one though, that Bretton Woods consensus was really entrenched.
Exports are the result, not the cause of economic growth. Every single good and service exported is something that can't be consumed at home. The Asian Tigers became prosperous thanks to lots of infrastructure and education spending.
 

kernals12

Banned
Reading New Deal Coalition Retained and this somewhat happens. In 1965 or so, a protectionist bill against German and Japanese industries is passed (spoiler image and quote ahead)






Spoilers ahead
New Dealers were pretty supportive of Free Trade.
 
Doesn't quality matter places like europe have higher health and safety regulations on food? American products sometimes are less regulated and use more chemicals, in uk here everybody talking about how we don't want american chlorinated chicken as we have stronger rules.
 
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