onal Budget Office (CBO) is obligated to review and “score” the financial consequences of any proposed legislation. It came out with a report on H.R. 4105. The title page of the Bill:
This legislation is about tariffs on China. The CBO concluded that the US Treasury will collect $160 billion over the next 10 years if the law is passed. That may sound good to some; I see it as a disaster in the making. If H.R. 4105 passes, it will cost the country Trillions. The history books say that is so.
H.R. 4105 “Applies the duty provisions of the Tariff Act of 1930.” The 1930 legislation that H.R. 4105 is relying on has a different name in the history books. It is called the Smoot-Hawley legislation. It was the dumbest legislation that could have been passed. It insured that America would remain stuck in a depression for another four years.
Smoot-Hawley worked as intended. From 1930 to 1934 imports fell by 65%. But damn near every trading partner, including England and Canada, retaliated by putting up their own tariffs. The depression spun around the globe as a result.
This time around will be no different. China will retaliate. Too bad the guys in D.C. don’t read history books.