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A Customs war, also known as a toll war or tariff war, is a type of economic conflict between two or more states. In order to pressure one of the states, the other raises taxes or tariffs for some of the products of that state. As a reprisal, the latter state may also increase the tariffs.
A tariff is a form of regulation of foreign trade, a policy that taxes foreign products to encourage or protect domestic industry; a tax on imports or exports between sovereign states. The tariff is historically used to protect infant industries and to allow import substitution industrialization.
One example of a modern tariff war occurred in the 1920s and 1930s between the Weimar Republic and Poland, in the German–Polish customs war. The Weimar Republic, led by Gustav Stresemann wanted to force Poland, by creating an economic crisis by increasing the tolls for coal and steel products developed there, to give up its territory. As a reprisal, the Poles increased toll rates for many German products. This led to fast development of the port of Gdynia, which was the only way Poland could export its goods to Western Europe without having to transport them through Germany.
The Weimar Republic is an unofficial historical designation for the German state from 1918 to 1933. The name derives from the city of Weimar, where its constitutional assembly first took place. The official name of the republic remained Deutsches Reich unchanged from 1871, because of the German tradition of substates. Although commonly translated as "German Empire", the word Reich here better translates as "realm", in that the term does not have monarchical connotations in itself. The Reich was changed from a constitutional monarchy into a republic. In English, the country was usually known simply as Germany.
The Second Polish Republic, commonly known as interwar Poland, refers to the country of Poland in the period between the First and Second World Wars (1918–1939). Officially known as the Republic of Poland, sometimes Commonwealth of Poland, the Polish state was re-established in 1918, in the aftermath of World War I. When, after several regional conflicts, the borders of the state were fixed in 1922, Poland's neighbours were Czechoslovakia, Germany, the Free City of Danzig, Lithuania, Latvia, Romania and the Soviet Union. It had access to the Baltic Sea via a short strip of coastline either side of the city of Gdynia. Between March and August 1939, Poland also shared a border with the then-Hungarian governorate of Subcarpathia. The Second Republic ceased to exist in 1939, when Poland was invaded by Nazi Germany, the Soviet Union and the Slovak Republic, marking the beginning of the European theatre of World War II.
The German–Polish customs war was a political and economic conflict between the Second Polish Republic and the Weimar Republic, which began in June 1925 and ended officially in March 1934. The conflict began when Poland's status expired as one of the Entente's most favoured nations in trade with Germany. Berlin then decided to raise customs duty, which primarily affected the Polish coal industry, Poland's main export to Germany. In return, Warsaw also raised duty on German goods. Germany's purpose in the war was to cause a breakdown of Poland's economy and gain political concessions. They included revanchist claims to Polish territories.
In September 1922 the Fordney–McCumber Tariff (named after Joseph Fordney, chair of the House Ways and Means Committee, and Porter McCumber, chair of the Senate Finance Committee) was signed by U.S. President Warren G. Harding.In the end, the tariff law raised the average American ad valorem tariff rate to 38 percent.
The Fordney–McCumber Tariff of 1922 was a law that raised American tariffs on many imported goods to protect factories and farms. The US Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade by providing huge loans to Europe. That, in turn, bought more US goods.
Warren Gamaliel Harding was the 29th president of the United States from 1921 until his death in 1923 and a member of the Republican Party. At that time, he was one of the most popular U.S. presidents, but the subsequent exposure of scandals that took place under his administration such as Teapot Dome eroded his popular regard, as did revelations of an affair by Nan Britton, one of his mistresses. In historical rankings of the U.S. presidents, Harding is often rated among the worst.
Trading partners complained immediately. Those injured by World War I said that, without access by their exports to the American market, they would not be able to make payments to America on war loans. But others saw that this tariff increase would have broader deleterious effects. Democratic Representative Cordell Hull said, "Our foreign markets depend both on the efficiency of our production and the tariffs of countries in which we would sell. Our own [high] tariffs are an important factor in each. They injure the former and invite the latter."
Cordell Hull was an American politician from Tennessee best known as the longest-serving U.S. Secretary of State, holding the position for 11 years (1933–1944) in the administration of President Franklin Delano Roosevelt during most of World War II. Hull received the Nobel Peace Prize in 1945 for his role in establishing the United Nations, and was referred to by President Roosevelt as the "Father of the United Nations".
Five years after the passage of the tariff, American trading partners had raised their own tariffs by a significant degree. France raised its tariffs on automobiles from 45% to 100%, Spain raised tariffs on American goods by 40%, and Germany and Italy raised tariffs on wheat.This customs war is often cited as one of the main causes of the Great Depression.
France, officially the French Republic, is a country whose territory consists of metropolitan France in Western Europe and several overseas regions and territories. The metropolitan area of France extends from the Mediterranean Sea to the English Channel and the North Sea, and from the Rhine to the Atlantic Ocean. It is bordered by Belgium, Luxembourg and Germany to the northeast, Switzerland and Italy to the east, and Andorra and Spain to the south. The overseas territories include French Guiana in South America and several islands in the Atlantic, Pacific and Indian oceans. The country's 18 integral regions span a combined area of 643,801 square kilometres (248,573 sq mi) and a total population of 67.3 million. France, a sovereign state, is a unitary semi-presidential republic with its capital in Paris, the country's largest city and main cultural and commercial centre. Other major urban areas include Lyon, Marseille, Toulouse, Bordeaux, Lille and Nice.
Spain, officially the Kingdom of Spain, is a country mostly located in Europe. Its continental European territory is situated on the Iberian Peninsula. Its territory also includes two archipelagoes: the Canary Islands off the coast of Africa, and the Balearic Islands in the Mediterranean Sea. The African enclaves of Ceuta, Melilla, and Peñón de Vélez de la Gomera make Spain the only European country to have a physical border with an African country (Morocco). Several small islands in the Alboran Sea are also part of Spanish territory. The country's mainland is bordered to the south and east by the Mediterranean Sea except for a small land boundary with Gibraltar; to the north and northeast by France, Andorra, and the Bay of Biscay; and to the west and northwest by Portugal and the Atlantic Ocean.
The Kingdom of Italy was a state which existed from 1861—when King Victor Emmanuel II of Sardinia was proclaimed King of Italy—until 1946—when a constitutional referendum led civil discontent to abandon the monarchy and form the modern Italian Republic. The state was founded as a result of the unification of Italy under the influence of the Kingdom of Sardinia, which can be considered its legal predecessor state.
The World Trade Organization was created to avoid customs wars, which are considered harmful to the world's economy.
The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 124 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.
International trade is the exchange of capital, goods, and services across international borders or territories.
The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, was an Act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.
Free trade is a trade policy that does not restrict imports or exports; it is the idea of the free market as applied to international trade. In government, free trade is predominately advocated by political parties that hold liberal economic positions, while economically left-wing and nationalist political parties generally support protectionism, the opposite of free trade.
Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents claim that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general, and harm the producers and workers in export sectors, both in the country implementing protectionist policies, and in the countries protected against.
Trade barriers are government-induced restrictions on international trade.
The Zollverein, or German Customs Union, was a coalition of German states formed to manage tariffs and economic policies within their territories. Organized by the 1833 Zollverein treaties, it formally started on 1 January 1834. However, its foundations had been in development from 1818 with the creation of a variety of custom unions among the German states. By 1866, the Zollverein included most of the German states. The foundation of the Zollverein was the first instance in history in which independent states had consummated a full economic union without the simultaneous creation of a political federation or union.
Non-tariff barriers to trade (NTBs) or sometimes called "Non-Tariff Measures (NTMs)" are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
On 31 December 1995, a 6 March 1995 Decision of the EC-Turkey Association Council, established by the Ankara Agreement, to implement a customs union between Turkey and the European Union, came into effect. Goods may travel between the two entities without any customs restrictions. The Customs Union does not cover essential economic areas such as agriculture, services or public procurement.
The Pig War, or Customs War, was a trade war between the Austro-Hungarian Empire and the Kingdom of Serbia in 1906 to 1908 in which the Habsburgs unsuccessfully imposed a customs blockade on Serbian pork.
The tariff history of the United States spans from 1789 to present. The first tariff law passed by the U.S. Congress, acting under the then-recently ratified Constitution, was the Tariff of 1789. Its purpose was to generate revenue for the federal government, and also to act as a protective barrier around newly starting domestic industries. An Import tax set by tariff rates was collected by treasury agents before goods could be unloaded at U.S. ports.
The Emergency Tariff of 1921 of the United States was enacted on May 27, 1921. The Underwood Tariff, passed under President Woodrow Wilson, had Republican leaders in the United States Congress rush to create a temporary measure to ease the plight of farmers until a better solution could be put into place. With growing unrest in the American public, President Warren G. Harding and Congress passed the tariff.
An Eco-tariff, also known as an environmental tariff, is a trade barrier erected for the purpose of reducing pollution and improving the environment. These trade barriers may take the form of import or export taxes on products that have a large carbon footprint or are imported from countries with lax environmental regulations.
Foreign trade of the United States comprises the international imports and exports of the United States, one of the world's most significant economic markets. The country is among the top three global importers and exporters.
Protectionism in the United States is protectionist economic policy that erected tariff and other barriers to trade with other nations. This policy was most prevalent in the 19th century. It attempted to restrain imports to protect Northern industries. It was opposed by Southern states that wanted free trade to expand cotton and other agricultural exports. Protectionist measures included tariffs and quotas on imported goods, along with subsidies and other means, to ensure fair competition between imported goods and local goods. In today's age the US is still highly protectionist, according to Global Trade Alert the US has adopted over 1000 protectionist measures since the Global Economic Crisis in 2008, more than any other country since.
The Trump tariffs are a series of tariffs imposed during the presidency of Donald Trump as part of his economic policy. In January 2018, Trump imposed tariffs on solar panels and washing machines of 30 to 50 percent. Later the same year he imposed tariffs on steel (25%) and aluminum (10%) from most countries. On June 1, 2018, this was extended on the European Union, Canada, and Mexico. The only countries which remain exempted from the steel and aluminum tariffs are Australia and Argentina. Separately, on July 6, the Trump administration set a tariff of 25% on 818 categories of goods imported from China worth $50 billion.
China and the United States are engaged in a trade war as each country continues to dispute tariffs placed on goods traded between them. US President Donald Trump had declared in his campaign to fix China's "longtime abuse of the broken international system and unfair practices". The economic disputes occurred before China's entry to the World Trade Organization but the administrations of former Presidents George H. W. Bush, Bill Clinton, George W. Bush, and Barack Obama all failed to solve the problems. In April 2018, the United States filed a request for consultation to the World Trade Organization in regard to concerns that China was violating intellectual property rights.
The German tariff of 1879 was a protectionist law passed by the Reichstag that imposed tariffs on industrial and agricultural imports into Imperial Germany.
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