More than 1,100 US economists signed a letter sent to President Donald Trump and to Congress on Thursday urging them to avoid repeating the mistakes that worsened the Depression in the 1930s.
The economic advisors to two Republican and two Democratic presidents and 15 Nobel laureates were among those urging the administration to fend off “a host of new protectionist activity, including threats to withdraw from trade agreements, misguided calls for new tariffs in response to trade imbalances, and the imposition of tariffs.”
The letter, from the National Taxpayers Union, which advocates for tax reform and government spending cuts, was sent on the anniversary of a similar missive sent to Congress on May 3, 1930.
That letter also featured more than 1,000 economists urging legislators to reject the Smoot-Hawley Tariff Act, a trade measure widely blamed for deepening and prolonging the global economic crisis.
“Congress did not take economists' advice in 1930 and Americans across the country paid the price,” the NTU said. “The undersigned economists and teachers of economics strongly urge you not to repeat that mistake.”
The petition comes as a high level delegation led by Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross are in Beijing negotiating a solution to the trade dispute sparked when Trump imposed steep tariffs on aluminum and steel, and on $50 billion in Chinese goods.
The Trump administration accuses China of rampant theft of US intellectual property and is demanding changes to their investment and patent protection policies, and is also reportedly considering cutting off access of Chinese high-tech companies to US products.
The White House also has riled the European Union which has only been given a temporary exemption from the steel and aluminum tariffs, which are now set to take effect on June 1.
The NTU letter quotes from the 1930 missive, which warned that tariffs would hurt consumers through price increases, and farmers through loss of markets for their goods.
“Such action would inevitably provoke other countries to pay us back in kind by levying retaliatory duties against our goods,” the letter said, adding that the policies would sow bitterness.
“A tariff war does not furnish good soil for the growth of world peace.”
The signatories include economists who advised former presidents Ronald Reagan and George W. Bush as well as former Federal Reserve vice chair Alan Blinder, and 2001 Nobel Prize winner George Akerlof, husband of former Fed chair Janet Yellen.
NTU's Free Trade Initiative director Bryan Riley said, “very few policy areas generate as much consensus among professional economists like free trade does. Protectionism is flat-earther economics.”