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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 tax on imports or exports between sovereign states. It is a form of regulation of foreign trade and a policy that taxes foreign products to encourage or safeguard domestic industry. Traditionally, states have used them as a source of income. Now, they are among the most widely used instruments of protectionism, along with import and export quotas.
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, the state was re-established in 1918, in the aftermath of World War I. 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. However, 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 its tariffs on American goods by 40%, and Germany and Italy raised their tariffs on wheat. According to the American Farm Bureau, farmers lost more than $300 million annually as a result of the tariff.
Warren Gamaliel Harding was the 29th president of the United States from 1921 until his death in 1923. A member of the Republican Party, he was one of the most popular U.S. presidents to that point. After his death, a number of scandals—including Teapot Dome—came to light, as did his extramarital affair with Nan Britton; each eroded his popular regard. Harding is often rated as one of the worst presidents in historical rankings.
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 67.02 million. France 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 European country located in Southwestern Europe with some pockets of Spanish territory across the Strait of Gibraltar and the Atlantic Ocean. 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 civil discontent led an institutional referendum 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 to be 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 123 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 a law that implemented protectionist trade policies in the United States. Sponsored by Senator Reed Smoot and Representative Willis C. Hawley, it was signed by President Herbert Hoover on June 17, 1930. The act raised US tariffs on over 20,000 imported goods.
Free trade is a trade policy that does not restrict imports or exports; it can also be understood as the free market idea applied to international trade. In government, free trade is predominantly 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.
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 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.
Success in export markets for developed and developing country firms is increasingly affected by the ability of countries to support an environment which promotes efficient and low cost trade services and logistics. Policies related to trade facilitation and economic development reflect the idea that trade can be a powerful engine for accelerating economic growth, job creation, and poverty reduction.
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.
The Trump tariffs are a series of United States tariffs imposed during the presidency of Donald Trump as part of his "America First" economic policy to reduce the United States trade deficit by shifting American trade policy from multilateral free trade agreements to bilateral trade deals. In January 2018, Trump imposed tariffs on solar panels and washing machines of 30 to 50 percent. In March 2018 he imposed tariffs on steel (25%) and aluminum (10%) from most countries, which, according to Morgan Stanley, covered an estimated 4.1 percent of U.S. imports. On June 1, 2018, this was extended to the European Union, Canada, and Mexico. In separate moves, the Trump administration has set and escalated tariffs on goods imported from China, leading to a trade war.
The China–United States trade war is an ongoing economic conflict between the world’s two largest national economies, China and the United States. President Donald Trump in 2018 began setting tariffs and other trade barriers on China with the goal of forcing it to make changes to what the U.S. says are "unfair trade practices". Among those trade practices and their effects are the growing trade deficit, the theft of intellectual property, and the forced transfer of American technology to China.
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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