The Impact of Tariffs and the Lessons from History
Introduction
Hello everyone! Welcome back to my channel. We are currently in the Pier-2 Art Center in Kaohsiung, Taiwan. The view outside is simply breathtaking, and look at the bridge behind me. It's rotating at the moment! Many people are gathered here to watch. This city has given me so many pleasant surprises during my recent trip. It's an artistic city yet has a laid-back and chill vibe. Compared to Taichung, the population density here is much lower, making the whole city quite comfortable. With the sea and the Love River running through it, there are numerous water features, adding to its charm. Today, I want to continue the topic we started last time, about the high tariffs imposed by Trump, which made me think of history as a cycle. Let's explore what happened during the Great Depression in the 1930s, how the trade war back then reshuffled the world order, and what lessons we can draw from it for the current situation.
The Great Depression and the Tariff War
In 1929, the US stock market crashed, known as the Wall Street Crash, which kicked off the Great Depression. Unemployment soared, banks went bankrupt, and credit froze. The US government was determined to save businesses and ensure American employment. In 1930, Congress passed the Smoot-Hawley Tariff Act, raising the average tariff on over 20,000 imported goods to 53%. This move was similar to what the US is doing now. The government aimed to protect the domestic market and create more jobs, so it started trade protectionism by increasing tariffs.
However, this actually triggered a global trade war. Other countries retaliated by also raising tariffs. Between 1929 and 1934, global trade plummeted by over 60%. This is reminiscent of the current situation, where countries are taking retaliatory measures.
The Response of Different Countries
Let's look at what happened in the UK at that time. In the 1930s, the UK was much more influential than it is now. It was still the British Empire, controlling India, Malaysia, and many other colonies. With strong consumption power and global influence, after being hit hard by the US tariffs, the UK decided to rally its allies. In 1932, it held the Ottawa Imperial Economic Conference and established the Ottawa Agreement, implementing the so-called Imperial Preference System. It formed an inner circle with countries like Canada, Australia, and India, reducing tariffs within the group while increasing them on foreign products. This is similar to what some countries are doing today, forming small circles of friendly allies for free trade among themselves.
At that time, the US was completely excluded from the British Commonwealth market, and the world was divided into closed economies. By 1934, with the rise of the US dollar hegemony, President Roosevelt came to power. He realized that a tariff war would only lead to a lose-lose situation. So, he actively promoted the Reciprocal Trade Agreement Act, reducing many tariffs and using the US market as a bargaining chip to force other countries to open their markets. This move laid the foundation for the US dollar to become the global trading currency.
In 1941, another important turning point occurred. Roosevelt and British Prime Minister Churchill signed the Atlantic Charter, calling for free trade among nations. In exchange, the UK had to give up its previous Imperial Preference System. In 1947, the US led the establishment of the General Agreement on Tariffs and Trade (GATT), establishing global free trade rules. These arrangements ultimately established a US-led free trade order and successfully replaced the UK as the world economic hegemon.
The Changes in the World Order
We can see that the Great Depression and the subsequent trade war had a profound impact on the world order. After that, the UK gradually declined, and many of its colonies gained independence. The US became the world's leader, and the US dollar became the global trading currency. Free trade became a rule and a form of power. The country that sets the rules can dominate global trade.
Comparing the Past and the Present
When we compare the past and the present, there are also differences. In the 1930s, the US was an industrial powerhouse with strong productivity. The use of machines greatly increased production efficiency. But now, the US has deindustrialized, and many labor-intensive industries have moved to other countries like China and Vietnam. However, the US is still a consumption superpower, with its annual consumption accounting for about 30% of the global total.
The Possibility of War
History has shown that after the 1930s, World War II broke out. War can be a way to resolve contradictions, reshuffle the world order, and consume excess production capacity. This makes us think about the current situation. Singapore's Prime Minister mentioned that the tariff war could potentially escalate into a hot war. Some people may think this is an over - worry, but looking at history, it's not impossible.
For example, Japan's attack on the US Pearl Harbor was not originally intended to start a full-scale war. Japan wanted to use the attack as a bargaining chip to negotiate a free trade agreement with the US. At that time, the US imposed a complete embargo on Japan's oil and metal, which was Japan's lifeline. Japan also attacked Malaysia and the Philippines to gain access to their oil and rubber resources. Their plan was to force the US to negotiate through war. Given Japan's small size, a full-scale war with the US was a relatively foolish decision. But in a tense atmosphere of unilateralism, a small incident can easily trigger a hot war.
The Situation for Overseas Chinese
Living in Europe and the US for a long time, we are now considering leaving these regions and returning to Asia. We moved our family from the UK to Malaysia last year, a decision we started planning in the second half of 2020 during the COVID-19 pandemic. The Russia-Ukraine war further confirmed our feeling that the situation is changing.
Recently, my husband showed me a video of the current US Vice President, JD Vance, during an interview with Fox News. He referred to the Chinese people as "Chinese peasants," a derogatory term that shows the inherent contempt in their hearts towards Chinese people. This attitude may be the same towards all non - white people and Asians.
This reflects the general attitude of many Western people towards the Chinese. They may feel that the Chinese are getting rich, and they have to borrow money to buy Chinese - made products. As the tariff war continues, we can expect that if tariffs are really implemented, the prices of goods in the US will soar. Politicians will continue to hype up anti - Chinese sentiment, blaming China and other countries for taking away American jobs and causing trade deficits, which may lead to hostility among the American public towards China.
In Europe and the US, the Chinese are among the wealthiest groups, even wealthier than Jews in some countries. In times of economic hardship, politicians can easily direct public hatred towards the Chinese, blaming them for hoarding property and taking away jobs, creating hatred and division.
Although it may seem alarmist, when Trump called the COVID-19 the "China virus" in 2020, it was already a sign of something wrong. The hostility between China and the US may last for a long time.
The Advantages of Living in Asia
After living in Asia for over a year, we are more convinced that living here is much better. Take Taiwan, for example. It's clean, safe, and the social operation is highly efficient. The government debt is only about 2 - 30%, compared to the 110 - 120% debt ratio in the UK and the US. We believe that Asia has a better future than Europe and the US.
The social problems in Europe and the US are becoming increasingly acute. Their social values are different from those in the East. In Europe and the US, the legal and political systems do not encourage people to do good deeds. Law-abiding citizens may feel let down. The criminal justice system is too lenient towards so-called vulnerable groups, lowering the cost of crime.
We have witnessed many extreme situations in the UK. For example, a neighbor saw a man with a gun in the community (gun - possession is illegal in the UK), took a photo, and reported it to the police. Even a senior cabinet member was aware of the situation, but nothing was done in the end. The man with the gun continued to come to the community, and the neighbor had to sell the house and move away. This is just one example of the problems in Western society.
Many people in the UK have experienced home break - ins, car thefts, etc., but often, the victims receive little protection. The police may record the incident but say they can't do anything due to insufficient manpower. Criminals feel that they can get away with their crimes, and the situation is getting worse.
The open - border policy in Europe and the US has led to a large influx of illegal immigrants. In the UK, thousands of people with no legal status enter the country every day. The low crime-solving rate in the UK (only 10% for serious crimes) also makes people feel unsafe.
The Problems in the US and the UK
In the US, the high cost of medical care is a major problem. The process of seeing a doctor is complicated, and even with insurance, people can receive huge bills. In the UK, the social governance also has many problems. For example, the Birmingham City Council went bankrupt, and the garbage collectors went on strike, leaving the streets filled with garbage, rats, and the risk of disease spread. The council still collects municipal taxes but refuses to provide services.
The Efficiency and Cost of Different Systems
The social systems in Europe and the US have high operating costs and low efficiency. The medical, judicial, and social management systems are very expensive and redundant. The same task can be completed much more efficiently in Asian hospitals compared to those in the US or the UK.
Conclusion
In conclusion, after living in Europe and the US for many years, we are disappointed with their social systems. We believe that Asia offers a better living environment, especially for raising children. The safety, education, and quality of life in Asia are more appealing.
We have traveled to many places in Asia in the past year, and we have found that life here is really good. We can go out at night without worrying about safety. In contrast, we were more cautious when living in New York.
As we continue to watch the development of the tariff war, we hope to have more in-depth discussions with you in the comments section. This video is just our sharing of views and thoughts. Thank you for watching, and goodbye!
{# 
{# 
{# 
{# 
{#