How did tariffs slow down the world trade in the Great Depression.
Is it because one country raises their tariffs to protect their profit, and the other countries vice versa, causing the products to be too expensive for other countries to trade or buy products.
Whoops, a run-on sentence.
Yep -- your answer is right. :-)
It's not a run-on sentence, but would be clearer if you broke it into two sentences.
Alright, thanks :)
No problem! Your understanding is partially correct. Tariffs did play a significant role in slowing down world trade during the Great Depression. Let me explain in a bit more detail.
During the Great Depression, many countries implemented protectionist measures, including raising tariffs on imported goods. The intention behind this was to protect domestic industries and jobs, as well as to generate revenue for the struggling economies. When a country imposes tariffs, it makes imported goods more expensive compared to domestically produced goods, thus encouraging consumers to buy locally produced items.
However, problems arise when multiple countries start engaging in protectionist policies simultaneously. As one country increases tariffs on imported goods, other countries often retaliate by raising their own tariffs. This triggers a cycle of escalating tariffs, known as trade wars, where multiple countries try to protect their own industries. As a result, the cost of trading between nations increases significantly.
The increase in tariffs creates several negative effects on global trade. First, higher tariffs make imported goods more expensive, reducing demand for foreign goods in the domestic market. This leads to a decline in exports for the countries affected, as their products become more expensive for foreign buyers.
Secondly, higher tariffs also reduce the competitiveness of domestic industries. When other countries retaliate with their own tariffs, it becomes more difficult for domestic businesses to export their products. This further hampers international trade and leads to a decrease in overall economic activity.
Lastly, trade wars and the subsequent decrease in world trade can create a ripple effect, intensifying the economic downturn. As trade slows down, businesses suffer from lower sales and reduced profits, leading to layoffs and increased unemployment rates. This, in turn, reduces consumer spending, exacerbating the economic recession.
In summary, tariffs during the Great Depression slowed down world trade by making foreign goods more expensive, reducing demand for imports and lowering exports. The retaliatory nature of protectionist policies triggered a cycle of trade wars, further reducing global trade and worsening the economic downturn.