The Obama administration just imposed a tariff on truck tires coming in from China. Result: Transportation costs rise, commodity costs rise. Not a good idea in this market.

Eswar Prasad, professor of trade economics at Cornell University, warned that the disagreement could escalate. “These protectionist measures, some of which amount to domestic political posturing rather than substantive restraints on trade, could easily ratchet up into a full-blown trade war and inflict serious economic damage on both countries,” he said.

In one of my earlier newsletters I reported the disastrous results of the Hoover FDR era: Hoover gave us the Smoot-Hawley Tariff in June of 1930, which followed the Fordney-McCumber Tarriff of 1922.  After artificially raising farm prices and creating a foreign trade war, Hoover, the so-called “free market” guy paid farmers hundreds of millions of dollars of U.S. consumer’s money to stop the farmers from growing too many crops.

Here is a Monday, Jun. 18, 1934 news bulletin:  Congress last week put into President Roosevelt's waiting hands a magnificent set of blue prints authorizing him to act as Contractor-in-Chief of U. S. tariffs. The terms of the Act differed little from the President's proposal. They gave him power, during the next three years, to make agreements with any foreign country for reciprocal tariff reductions. Such agreements he can put in effect without the approval of Congress. As under the flexible tariff law. in force since 1922, the President will not be able to lower tariffs more than 50% from present rates, but he can act independently of the Tariff Commission

Time.com It is an article of faith among economists that rising global protectionism intensified the Great Depression of the 1930s. History looks back at the infamous Smoot-Hawley Act, which jacked up tariffs in the U.S., as a disastrous step that stymied the international economic cooperation needed to alleviate the worst economic catastrophe in modern history.