A realistic fairy tale.

4 min read

A long time ago in a galaxy far-far away, during a time of great economic turmoil, the leaders of a prosperous nation decided to implement high trade barriers to protect their industries from foreign competition. They believed these measures would safeguard jobs and stimulate their economy, support their internal programs to strengthen their economy. However, the results were far from what they had hoped.

As the barriers went up, neighbouring nations felt the sting of exclusion and responded in the same manner, erecting their own barriers. The once vibrant exchange of goods and ideas slowed to a trickle. Markets shrank, businesses closed, and many people found themselves out of work. Economic hardships were widespread, and the social fabric began to fray.

Amidst this hardship, nations turned inward. Leaders preached self-reliance and economic independence, rallying their people around the idea of self-sufficiency. But as each nation sought to become self-sustaining, their isolation deepened. Cooperation gave way to suspicion. Alliances weakened, the earlier existed international regimes were changed more often and finally they were nothing but empty shells.

In the chaos of economic decline, political landscapes shifted dramatically. Democracies struggled under the weight of the crisis, and in some places, trust in elected leaders evaporated. Desperate for solutions, people turned to charismatic figures who promised swift and decisive action to restore their nations to glory.

As these ambitions clashed, the world became a tinderbox of tension. The diplomatic efforts that once kept hostilities in check were now undermined by the pervasive atmosphere of mistrust. Retaliatory measures bred resentment, and economic isolation became a fertile ground for militarization.

Militaries swelled as nations prepared for the inevitable conflicts that seemed to loom on the horizon. The drive to secure resources and territories led to a series of aggressive moves, each one escalating the situation further.

In the end, the trade barriers that were meant to protect and strengthen economies had instead sown the seeds of discord and war. The interconnected web of nations, once bound by trade and cooperation, was now entangled in a struggle for survival, setting the stage for a conflict that would engulf the world.

And so, from the ashes of economic protectionism and nationalist fervour, the world was plunged into a devastating war, a grim reminder of how interconnected our fates truly are, and how the actions of a few can ripple out to affect the many.

Right now, this story is exactly what it seems to be: a story. Written by a fellow journalist who has a lot of free time at his hands.

It is part of a game we often play, testing each other’s reactions to stories, whether we can spot fake news and alike. The fairy tale-like elements are added for increased difficulty and distraction purposes.

But on a second thought, it could as well be real.

“The first man to erect a fence around a piece of land and declare it his own founded civil society and doomed mankind to millennia of war and famine,” this is something we’ve known since Jean Jacques Rousseau.

Walls (both physical and virtual) can be a blessing or a curse, depending on for what they are used. If it starts a bidding war, and stronger and more impenetrable boundaries are erected out of desperation (e.g. because Chinese economic output grows more than that of the U.S. and/or Europe), then it might lead to an unwanted escalation.

It was just last week that President Joe Biden announced the plans to implement new tariffs against Chinese imports, neither the first, nor the last amongst similar steps. The latest statement of the White House made it clear that President Biden’s economic plan is boosting investments and job creation in key sectors vital for America’s future. In response to China’s unfair trade practices—such as forced technology transfer, intellectual property theft, and flooding global markets with low-priced exports—Biden is increasing tariffs on $18 billion of Chinese imports (from port cranes to semiconductors).

Biden asserts that American workers can compete globally if given fair competition, but China’s practices have given it a dominant position in crucial global productions, posing risks to U.S. supply chains and economic security.

European Commission President Ursula von der Leyen had similar messages after the Chinese president’s visit in Europe.

Then, again, trade conflicts are not limited to West vs China: tensions are mounting between the US and the EU, too, let it be about the “steel and aluminium talks”, or agriculture, pharmaceuticals, medical devices, cars, digital services, aircraft subsidies. And so on.

We know that trade tariffs are useful tools in the hands of great economies.

To address the significant trade deficits (U.S. had in 2023 a growing 62,2 billion deficit) ; to shield industries from foreign competition, preserving jobs and promoting domestic manufacturing (as today). Tariffs can have geopolitical usefulness, as they can counter the economic rise of strategic competitors (like China); fight against unfair trade practices and shifting global trade policies.

Last, but not least, they can serve domestic political considerations, especially in campaign periods.

Besides the “tariffs”-part, the strong militarization and growing military spending part also seems as if … happening now, following the Russian aggression against Ukraine. And again, it’s happening on both sides: while NATO countries’ defence expenditures are growing, Russia has just initiated a complete war economy. In addition to the growing security tension between the USA and China.

As of now, the story is not real. In the present.

But it did happen before, exactly the way it was described (sans the Star Wars references).

It happened in the 1930s during and after the Grand Depression. One of the less debated and researched reasons of the escalation and militarization of the 1930s.

Long story short: The trade tariffs of the 1930s, particularly those resulting from the Smoot-Hawley Tariff Act, had several indirect but significant impacts that contributed to the conditions leading to World War II.

The Smoot-Hawley Tariff Act of 1930 raised U.S. tariffs on over 20,000 imported goods. This led to retaliatory tariffs from other nations, resulting in a significant drop in international trade. By 1933, global trade had fallen by around 65%. The reduction in trade deepened the Great Depression, causing widespread unemployment and economic instability in many countries. This economic downward spiral increased social and political unrest globally.

Reacting to the hardships, many countries initiated protectionist policies to safeguard their economies. This economic nationalism further isolated nations and reduced international cooperation. Countries like Germany and Japan pursued policies of economic self-sufficiency, which aligned with their expansionist and militaristic ambitions.

Economic conditions undermined public confidence in democratic governments, this destabilization paved the way for the rise of authoritarian regimes. Countries increasingly turned inward, diplomacy slowed down, focusing on national interests rather than international cooperation, further eroding the already shaky global order. Nations like Germany and Japan invested heavily in military buildup as a means of economic recovery and national strengthening, setting the stage for military conflicts.

While trade tariffs of the 1930s were not a direct cause of World War II, they played a significant role in creating the economic and political conditions that led to the war.

Parallels that seem to be too similar to be simply ignored.

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