The long US history of tariff wars with Canada and the world

Trump has justified his threat by accusing the three targeted countries of not doing enough to prevent drugs, specifically fentanyl, from entering the US. He has also insisted that Canada and Mexico are flooding the US with unauthorised immigrants by permitting them access to US borders. Finally, he has alluded to the trade deficits that the US has with each of these nations – its top three trading partners.

“Number one is the people that have poured into our country, so horribly and so much … number two are the drugs, fentanyl and everything else that have come into the country … and number three are the massive subsidies we’re giving to Canada and Mexico over deficits,” Trump said in the Oval Office on Thursday.

On Saturday, Trump declared a state of emergency by invoking the International Emergency Economic Powers Act (IEEPA) and imposed tariffs on the three countries. These tariffs were to come into effect from 12:01am EST (05:01 GMT) on Tuesday.

But after a telephone call with Mexican President Claudia Sheinbaum and two conversations with Canadian Prime Minister Justin Trudeau, Trump agreed to put the tariffs on the two neighbours on pause for a month.

1930: The Smoot-Hawley Tariffs

In 1929, the stock market crashed on Wall Street, sending shock waves through the US and the rest of the world. The Great Depression, a period of global economic turmoil that would last a decade, had begun.

Months later, in June 1930, US President Herbert Hoover signed the Smoot-Hawley Act into law. The law was originally aimed at imposing tariffs to protect US farmers from foreign competition, but it was extended to a wider array of products and increased tariffs on agricultural and industrial goods by about 20 percent.

The law was named after its top supporters, Republican Senator Reed Smoot of Utah and Republican Representative Willis Hawley of Oregon.

Almost immediately, the act caused trade wars. Several countries, including Canada, France and Spain, imposed retaliatory tariffs on US products. Canada slapped tariffs on 16 US products which accounted for about a third of US exports at the time, according to US-based nonprofit research organisation, the National Bureau of Economic Research (NBER).

The slowdown of trade weakened the US economy. By 1933, US exports dropped by 61 percent. Smoot-Hawley is often cited by experts as a factor which aggravated the US economic crisis.

1960s: Chicken War

In the 1960s, the US and European nations played an expensive game of chicken across the Atlantic Ocean.

During World War II from 1939 to 1945, red meat was rationed. The US government began a campaign to encourage Americans to eat fish and poultry instead. In the years that followed, the US ramped up the factory farming of chicken, which lowered the price of poultry.

The period after World War II also saw the acceleration of globalisation. Europe started buying cheap chicken from the US. As a result, European farmers were scared of being priced out of the market with fast, inexpensive American chickens out-clucking slower, pricier European ones.

In 1962, members of the European Economic Community (EEC), which was later absorbed into the European Union, imposed tariffs on American chicken. France, West Germany, Italy, Belgium, the Netherlands and Luxembourg increased their tariff on US poultry to 13.43 cents (around $1.4 today), per pound of chicken.

1982: The lumber war between the US and Canada

The US was convinced that it could see the wood for the trees, as it battled Canada over softwood lumber.

The root of the conflict was the fact that Canada grows and harvests lumber from public land, with prices determined by the government. On the other hand, the US harvests lumber from privately owned lots.

In 1982, the US argued that Canada was unfairly subsidising its softwood lumber, which led to several rounds of conflict, tariffs and retaliatory tariffs.

The lumber war continues. Canadian lumber faces an existing 14 percent tariff in the US, even before Trump’s threat to add 25 percent more.