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KRIS MITCHENER

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Santa Clara University


The Smoot-Hawley Trade War
(with Kirsten Wandschneider and Kevin Hjortshøj O’Rourke)


Zoom link: https://zoom.us/j/99699520200


Abstract
We document the outbreak of a trade war after the U.S. adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested the possible implementation of the sweeping tariff legislation, with many eventually choosing to retaliate by increasing their tariffs on imports from the United States. Using a new quarterly dataset on bilateral trade for 99 countries during the interwar period, we show that U.S. exports to countries that protested fell by between 15 and 22 percent, while U.S. exports to retaliators fell by 28-33 percent. Furthermore, using a second new dataset on U.S. exports at the product-level, we find that the most important U.S. exports to retaliating markets were particularly affected, suggesting a possible mechanism whereby the U.S. was targeted despite countries’ MFN obligations. The retaliators’ welfare gains from trade fell by roughly 8-17%.  


Bio
Kris James Mitchener is the Robert and Susan Finocchio Professor of Economics at Santa Clara University, Research Associate at the National Bureau of Economic Research (NBER) and the Centre for Competitive Advantage and the Global Economy (CAGE), and Research Fellow at the Centre for Economic and Policy Research (CEPR) and CESifo. His research focuses on economic history, international economics, macroeconomics, and political economy. He is a leading expert on the history of financial crises, and is currently researching how banking crises redistribute risk in financial networks distribute and can amplify the size of downturns through balance-sheet effects. His current research in international macroeconomics analyzes how commodity-price shocks affect countries' commitments to pegged exchange rates as well as the effects of monetary policy shocks on output and inflation. In political economy, he is working on understanding how financial instruments can be designed to reduce conflict and enable political and economic modernization, as was the case with the issuance of samurai bonds in Meiji Japan.


Download the paper here.