Did the Axis engage in trade with other countries during the war?

Did the Axis engage in trade with other countries during the war?

In Europe, Germany had occupied several countries while actively being at war with the United Kingdom, the Soviet Union and the United States while Japan had been expanding through most the neighbouring countries in Asia; the United States being the most active in the Pacific was Japan's biggest enemy.

Being at war with the most powerful allied nations and having no real allies except each other, was the rest of the world restricted from trading with the Axis countries? Did Germany and Japan engage or even had the need to engage in trade as they were collecting from the countries they had occupied?

Stated here from the Wikipedia page on War reparations

World War II Germany

During World War II, Nazi Germany extracted payments from occupied countries and compelled loans. In addition, countries were obliged to provide resources, and forced labour.

Japan

Sino-Japanese War of 1895

The Treaty of Shimonoseki, signed on April 17, 1895, obliged China to pay an indemnity of 200 million silver taels (¥3.61 billion) to Japan; and to open the ports of Shashi, Chongqing, Suzhou and Hangzhou to Japanese trade.


Germany

Germany's international trade was largely restricted to overland routes due to the allied blockade. In 1942, Germany's main exports consisted of engineering products, metals and fuels. In addition to trading with the countries it occupied, Germany imported tungsten from Spain and chromite from Turkey.

Due to the Skagerrak blockade (pdf), Sweden became heavily dependent on Germany as a trading partner, importing fertilizers and coal (among other items) and exporting iron ore, ball bearings and wood. Switzerland traded currency and gold with Germany as well as precision machine tools, watches and other items.

Before the invasion of the Soviet Union, Germany obtained raw materials (pdf), including rubber, from Southeast Asia via the Trans-Siberian railway.


Italy

Prior to the war, 80% of Italy's trade came through the Straits of Gibraltar. Italy's ability to trade was also severely hampered by a lack of foreign currency and limited industrial productivity. Germany was a major trading partner, and Italy also traded with neutral countries such as Spain and Switzerland, and even sold planes to Sweden.


Japan

Like Italy, Japan also had limited foreign currency, and was also hampered by an inadequate merchant fleet. Prior to Pearl Harbor, the US was a major trade partner despite increasing restrictions imposed by the Americans.

Even more than Germany, Japan exploited its occupied territories ruthlessly, partly under the guise of the Greater East Asia Co-Prosperity Sphere. Indonesia became the main source of oil for Japan., though this was still insufficient. More tin and rubber than was needed came from Malaya, especially after Operation Barbarossa effectively ended the possibility of exporting any significant surplus production by land to Germany. Among other products, rice was obtained from Thailand, with iron and copper amongst those from the Philippines.


Trade between the Axis powers

There were obvious difficulties in shipping goods from Japanese controlled areas in Southeast Asia all the way to Europe. Nonetheless, blockade-runners

between 1941 and 1944… delivered 43,983 tons of natural rubber to the German and Italian war industries. They also carried 68,117 tons of other essential materials, mostly from Southeast Asia, such as tungsten, tin, and quinine, and altogether about two-thirds of the German annual requirement for these items… Although by mid 1942 Germany and Italy had unlimited access, at least in theory, to natural rubber, shipping it safely to Europe became extremely dangerous… While the only viable route was now via the sea, the Allies' blockade became so effective, especially after the introduction of the Checkmate System on 8 June 1943, that fewer and fewer Axis blockade-runners succeeded in reaching Europe. By late 1942 and early 1943, only one of the six ships that left for Europe reached its destination.

In return, Japan received military technology, though the Germans actually had little to spare. With so few surface ships making it (pdf),

In summer 1944 Hitler forbade the employment of German surface blockade runner because of the risks… The last German surface blockade runner ship reached France in November 1943

Thus, submarines were increasingly used despite their limited capacity (up to 160 tons), and many never reached their destination:

Among the tens of German and Italian submarines that were sent to the Indian Ocean and the four Japanese ones that left for Europe, only a fraction succeeded in making their way back or surviving the war. In 1944 alone, nine of the twelve submarines that left for Europe were sunk or forced to return.

During 1944-45,

these submarines carried 2,606 tons of vital raw materials (mainly tin, rubber, tungsten, quinine, and opium, in descending order) from Asia to Europe and 2,070 tons (made up of mercury, lead, aluminium, glass, and steel) in the opposite direction.

but…

due to the high ratio of losses en route… no more than 611 tons of materiel (23.4% of the total carried) arrived in Europe - considerably less, ironically, than the materiel (869 tons or 42% of the total) which managed to arrive in Asia


Yes, they needed trade and did trade. In 1939-41 Germany traded with USA and Soviet Union, which were neutral at that time. During the rest of the war it traded with Sweden and other neutral countries (Spain, Portugal, Turkey, Switzerland, Ireland etc.)


Did the Axis engage in trade with other countries during the war? - History

Foreign Trade and Global Economic Policies

Foreign Trade
and Global
Economic
Policies
U.S. foreign trade and global economic policies have changed direction dramatically during the more than two centuries that the United States has been a country. In the early days of the nation's history, government and business mostly concentrated on developing the domestic economy irrespective of what went on abroad. But since the Great Depression of the 1930s and World War II, the country generally has sought to reduce trade barriers and coordinate the world economic system. This commitment to free trade has both economic and political roots the United States increasingly has come to see open trade as a means not only of advancing its own economic interests but also as a key to building peaceful relations among nations.
The United States dominated many export markets for much of the postwar period -- a result of its inherent economic strengths, the fact that its industrial machine was untouched by war, and American advances in technology and manufacturing techniques. By the 1970s, though, the gap between the United States' and other countries' export competitiveness was narrowing. What's more, oil price shocks, worldwide recession, and increases in the foreign exchange value of the dollar all combined during the 1970s to hurt the U.S. trade balance. U.S. trade deficits grew larger still in the 1980s and 1990s as the American appetite for foreign goods consistently outstripped demand for American goods in other countries. This reflected both the tendency of Americans to consume more and save less than people in Europe and Japan and the fact that the American economy was growing much faster during this period than Europe or economically troubled Japan.
Mounting trade deficits reduced political support in the U.S. Congress for trade liberalization in the 1980s and 1990s. Lawmakers considered a wide range of protectionist proposals during these years, many of them from American industries that faced increasingly effective competition from other countries. Congress also grew reluctant to give the president a free hand to negotiate new trade liberalization agreements with other countries. On top of that, the end of the Cold War saw Americans impose a number of trade sanctions against nations that it believed were violating acceptable norms of behavior concerning human rights, terrorism, narcotics trafficking, and the development of weapons of mass destruction.
Despite these setbacks to free trade, the United States continued to advance trade liberalization in international negotiations in the 1990s, ratifying a North American Free Trade Agreement (NAFTA), completing the so-called Uruguay Round of multilateral trade negotiations, and joining in multilateral agreements that established international rules for protecting intellectual property and for trade in financial and basic telecommunications services.
Still, at the end of the 1990s, the future direction of U.S. trade policy was uncertain. Officially, the nation remained committed to free trade as it pursued a new round of multilateral trade negotiations worked to develop regional trade liberalization agreements involving Europe, Latin America, and Asia and sought to resolve bilateral trade disputes with various other nations. But political support for such policies appeared questionable. That did not mean, however, that the United States was about to withdraw from the global economy. Several financial crises, especially one that rocked Asia in the late 1990s, demonstrated the increased interdependence of global financial markets. As the United States and other nations worked to develop tools for addressing or preventing such crises, they found themselves looking at reform ideas that would require increased international coordination and cooperation in the years ahead.

From Protectionism to Liberalized Trade
The United States has not always been a forceful advocate of free trade. At times in its history, the country has had a strong impulse toward economic protectionism (the practice of using tariffs or quotas to limit imports of foreign goods in order to protect native industry). At the beginning of the republic, for instance, statesman Alexander Hamilton advocated a protective tariff to encourage American industrial development -- advice the country largely followed. U.S. protectionism peaked in 1930 with the enactment of the Smoot-Hawley Act, which sharply increased U.S. tariffs. The act, which quickly led to foreign retaliation, contributed significantly to the economic crisis that gripped the United States and much of the world during the 1930s.
The U.S. approach to trade policy since 1934 has been a direct outgrowth of the unhappy experiences surrounding the Smoot-Hawley Act. In 1934, Congress enacted the Trade Agreements Act of 1934, which provided the basic legislative mandate to cut U.S. tariffs. "Nations cannot produce on a level to sustain their people and well-being unless they have reasonable opportunities to trade with one another," explained then-Secretary of State Cordell Hull. "The principles underlying the Trade Agreements Program are therefore an indispensable cornerstone for the edifice of peace."
Following World War II, many U.S. leaders argued that the domestic stability and continuing loyalty of U.S. allies would depend on their economic recovery. U.S. aid was important to this recovery, but these nations also needed export markets -- particularly the huge U.S. market -- in order to regain economic independence and achieve economic growth. The United States supported trade liberalization and was instrumental in the creation of the General Agreement on Tariffs and Trade (GATT), an international code of tariff and trade rules that was signed by 23 countries in 1947. By the end of the 1980s, more than 90 countries had joined the agreement.
In addition to setting codes of conduct for international trade, GATT sponsored several rounds of multilateral trade negotiations, and the United States participated actively in each of them, often taking a leadership role. The Uruguay Round, so named because it was launched at talks in Punta del Este, Uruguay, liberalized trade further in the 1990s.

American Trade Principles and Practice
The United States believes in a system of open trade subject to the rule of law. Since World War II, American presidents have argued that engagement in world trade offers American producers access to large foreign markets and gives American consumers a wider choice of products to buy. More recently, America's leaders have noted that competition from foreign producers also helps keep prices down for numerous goods, thereby reducing pressures from inflation.
Americans contend that free trade benefits other nations as well. Economists have long argued that trade allows nations to concentrate on producing the goods and services they can make most efficiently -- thereby increasing the overall productive capacity of the entire community of nations. What's more, Americans are convinced that trade promotes economic growth, social stability, and democracy in individual countries and that it advances world prosperity, the rule of law, and peace in international relations.
An open trading system requires that countries allow fair and nondiscriminatory access to each other's markets. To that end, the United States is willing to grant countries favorable access to its markets if they reciprocate by reducing their own trade barriers, either as part of multilateral or bilateral agreements. While efforts to liberalize trade traditionally focused on reducing tariffs and certain nontariff barriers to trade, in recent years they have come to include other matters as well. Americans argue, for instance, that every nation's trade laws and practices should be transparent -- that is, everybody should know the rules and have an equal chance to compete. The United States and members of the Organization for Economic Cooperation and Development (OECD) took a step toward greater transparency in the 1990s by agreeing to outlaw the practice of bribing foreign government officials to gain a trade advantage.
The United States also frequently urges foreign countries to deregulate their industries and to take steps to ensure that remaining regulations are transparent, do not discriminate against foreign companies, and are consistent with international practices. American interest in deregulation arises in part out of concern that some countries may use regulation as an indirect tool to keep exports from entering their markets.
The administration of President Bill Clinton (1993-2001) added another dimension to U.S. trade policy. It contend that countries should adhere to minimum labor and environmental standards. In part, Americans take this stance because they worry that America's own relatively high labor and environmental standards could drive up the cost of American-made goods, making it difficult for domestic industries to compete with less-regulated companies from other countries. But Americans also argue that citizens of other countries will not receive the benefits of free trade if their employers exploit workers or damage the environment in an effort to compete more effectively in international markets.
The Clinton administration raised these issues in the early 1990s when it insisted that Canada and Mexico sign side agreements pledging to enforce environmental laws and labor standards in return for American ratification of NAFTA. Under President Clinton, the United States also worked with the International Labor Organization to help developing countries adopt measures to ensure safe workplaces and basic workers' rights, and it financed programs to reduce child labor in a number of developing countries. Still, efforts by the Clinton administration to link trade agreements to environmental protection and labor-standards measures remain controversial in other countries and even within the United States.
Despite general adherence to the principles of nondiscrimination, the United States has joined certain preferential trade arrangements. The U.S. Generalized System of Preferences program, for instance, seeks to promote economic development in poorer countries by providing duty-free treatment for certain goods that these countries export to the United States the preferences cease when producers of a product no longer need assistance to compete in the U.S. market. Another preferential program, the Caribbean Basin Initiative, seeks to help an economically struggling region that is considered politically important to the United States it gives duty-free treatment to all imports to the United States from the Caribbean area except textiles, some leather goods, sugar, and petroleum products.
The United States sometimes departs from its general policy of promoting free trade for political purposes, restricting imports to countries that are thought to violate human rights, support terrorism, tolerate narcotics trafficking, or pose a threat to international peace. Among the countries that have been subject to such trade restrictions are Burma, Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. But in 2000, the United States repealed a 1974 law that had required Congress to vote annually whether to extend "normal trade relations" to China. The step, which removed a major source of friction in U.S.-China relations, marked a milestone in China's quest for membership in the World Trade Organization.
There is nothing new about the United States imposing trade sanctions to promote political objectives. Americans have used sanctions and export controls since the days of the American Revolution, well over 200 years ago. But the practice has increased since the end of the Cold War. Still, Congress and federal agencies hotly debate whether trade policy is an effective device to further foreign policy objectives.

Multilateralism, Regionalism, and Bilateralism
One other principle the United States traditionally has followed in the trade arena is multilateralism. For many years, it was the basis for U.S. participation and leadership in successive rounds of international trade negotiations. The Trade Expansion Act of 1962, which authorized the so-called Kennedy Round of trade negotiations, culminated with an agreement by 53 nations accounting for 80 percent of international trade to cut tariffs by an average of 35 percent. In 1979, as a result of the success of the Tokyo Round, the United States and approximately 100 other nations agreed to further tariff reductions and to the reduction of such nontariff barriers to trade as quotas and licensing requirements.
A more recent set of multilateral negotiations, the Uruguay Round, was launched in September 1986 and concluded almost 10 years later with an agreement to reduce industrial tariff and nontariff barriers further, cut some agricultural tariffs and subsidies, and provide new protections to intellectual property. Perhaps most significantly, the Uruguay Round led to creation of the World Trade Organization, a new, binding mechanism for settling international trade disputes. By the end of 1998, the United States itself had filed 42 complaints about unfair trade practices with the WTO, and numerous other countries filed additional ones -- including some against the United States.
Despite its commitment to multilateralism, the United States in recent years also has pursued regional and bilateral trade agreements, partly because narrower pacts are easier to negotiate and often can lay the groundwork for larger accords. The first free trade agreement entered into by the United States, the U.S.-Israel Free Trade Area Agreement, took effect in 1985, and the second, the U.S.-Canada Free Trade Agreement, took effect in 1989. The latter pact led to the North American Free Trade Agreement in 1993, which brought the United States, Canada, and Mexico together in a trade accord that covered nearly 400 million people who collectively produce some $8.5 trillion in goods and services.
Geographic proximity has fostered vigorous trade between the United States, Canada and Mexico. As a result of NAFTA, the average Mexican tariff on American goods dropped from 10 percent to 1.68 percent, and the average U.S. tariff on Mexican goods fell from 4 percent to 0.46 percent. Of particular importance to Americans, the agreement included some protections for American owners of patents, copyrights, trademarks, and trade secrets Americans in recent years have grown increasingly concerned about piracy and counterfeiting of U.S. products ranging from computer software and motion pictures to pharmaceutical and chemical products.

Current U.S. Trade Agenda
Despite some successes, efforts to liberalize world trade still face formidable obstacles. Trade barriers remain high, especially in the service and agricultural sectors, where American producers are especially competitive. The Uruguay Round addressed some service-trade issues, but it left trade barriers involving roughly 20 segments of the service sector for subsequent negotiations. Meanwhile, rapid changes in science and technology are giving rise to new trade issues. American agricultural exporters are increasingly frustrated, for instance, by European rules against use of genetically altered organisms, which are growing increasingly prevalent in the United States.
The emergence of electronic commerce also is opening a whole new set of trade issues. In 1998, ministers of the World Trade Organization issued a declaration that countries should not interfere with electronic commerce by imposing duties on electronic transmissions, but many issues remain unresolved. The United States would like to make the Internet a tariff-free zone, ensure competitive telecommunications markets around the world, and establish global protections for intellectual property in digital products.
President Clinton called for a new round of world trade negotiations, although his hopes suffered a setback when negotiators failed to agree on the idea at a meeting held in late 1999 in Seattle, Washington. Still, the United States hopes for a new international agreement that would strengthen the World Trade Organization by making its procedures more transparent. The American government also wants to negotiate further reductions in trade barriers affecting agricultural products currently the United States exports the output of one out of every three hectares of its farmland. Other American objectives include more liberalization of trade in services, greater protections for intellectual property, a new round of reductions in tariff and nontariff trade barriers for industrial goods, and progress toward establishing internationally recognized labor standards.
Even as it holds high hopes for a new round of multilateral trade talks, the United States is pursuing new regional trade agreements. High on its agenda is a Free Trade Agreement of the Americas, which essentially would make the entire Western Hemisphere (except for Cuba) a free-trade zone negotiations for such a pact began in 1994, with a goal of completing talks by 2005. The United States also is seeking trade liberalization agreements with Asian countries through the Asia-Pacific Economic Cooperation (APEC) forum APEC members reached an agreement on information technology in the late 1990s.
Separately, Americans are discussing U.S.-Europe trade issues in the Transatlantic Economic Partnership. And the United States hopes to increase its trade with Africa, too. A 1997 program called the Partnership for Economic Growth and Opportunity for Africa aims to increase U.S. market access for imports from sub-Saharan countries, provide U.S. backing to private sector development in Africa, support regional economic integration within Africa, and institutionalize government-to-government dialogue on trade via an annual U.S.-Africa forum.
Meanwhile, the United States continues to seek resolution to specific trade issues involving individual countries. Its trade relations with Japan have been troubled since at least the 1970s, and at the end of the 1990s, Americans continued to be concerned about Japanese barriers to a variety of U.S. imports, including agricultural goods and autos and auto parts. Americans also complained that Japan was exporting steel into the United States at below-market prices (a practice known as dumping), and the American government continued to press Japan to deregulate various sectors of its economy, including telecommunications, housing, financial services, medical devices, and pharmaceutical products.
Americans also were pursuing specific trade concerns with other countries, including Canada, Mexico, and China. In the 1990s, the U.S. trade deficit with China grew to exceed even the American trade gap with Japan. From the American perspective, China represents an enormous potential export market but one that is particularly difficult to penetrate. In November 1999, the two countries took what American officials believed was a major step toward closer trade relations when they reached a trade agreement that would bring China formally into the WTO. As part of the accord, which was negotiated over 13 years, China agreed to a series of market-opening and reform measures it pledged, for instance, to let U.S. companies finance car purchases in China, own up to 50 percent of the shares of Chinese telecommunications companies, and sell insurance policies. China also agreed to reduce agricultural tariffs, move to end state export subsidies, and takes steps to prevent piracy of intellectual property such as computer software and movies. The United States subsequently agreed, in 2000, to normalize trade relations with China, ending a politically charged requirement that Congress vote annually on whether to allow favorable trade terms with Beijing.
Despite this widespread effort to liberalize trade, political opposition to trade liberalization was growing in Congress at the end of the century. Although Congress had ratified NAFTA, the pact continued to draw criticism from some sectors and politicians who saw it as unfair.
What's more, Congress refused to give the president special negotiating authority seen as essential to successfully reaching new trade agreements. Trade pacts like NAFTA were negotiated under "fast-track" procedures in which Congress relinquished some of its authority by promising to vote on ratification within a specified period of time and by pledging to refrain from seeking to amend the proposed treaty. Foreign trade officials were reluctant to negotiate with the United States -- and risk political opposition within their own countries -- without fast-track arrangements in place in the United States. In the absence of fast-track procedures, American efforts to advance the Free Trade Agreement of the Americas and to expand NAFTA to include Chile languished, and further progress on other trade liberalization measures appeared in doubt.

The U.S. Trade Deficit
At the end of the 20th century, a growing trade deficit contributed to American ambivalence about trade liberalization. The United States had experienced trade surpluses during most of the years following World War II. But oil price shocks in 1973-1974 and 1979-1980 and the global recession that followed the second oil price shock caused international trade to stagnate. At the same time, the United States began to feel shifts in international competitiveness. By the late 1970s, many countries, particularly newly industrializing countries, were growing increasingly competitive in international export markets. South Korea, Hong Kong, Mexico, and Brazil, among others, had become efficient producers of steel, textiles, footwear, auto parts, and many other consumer products.
As other countries became more successful, U.S. workers in exporting industries worried that other countries were flooding the United States with their goods while keeping their own markets closed. American workers also charged that foreign countries were unfairly helping their exporters win markets in third countries by subsidizing select industries such as steel and by designing trade policies that unduly promoted exports over imports. Adding to American labor's anxiety, many U.S.-based multinational firms began moving production facilities overseas during this period. Technological advances made such moves more practical, and some firms sought to take advantage of lower foreign wages, fewer regulatory hurdles, and other conditions that would reduce production costs.
An even bigger factor leading to the ballooning U.S. trade deficit, however, was a sharp rise in the value of the dollar. Between 1980 and 1985, the dollar's value rose some 40 percent in relation to the currencies of major U.S. trading partners. This made U.S. exports relatively more expensive and foreign imports into the United States relatively cheaper. Why did the dollar appreciate? The answer can be found in the U.S. recovery from the global recession of 1981-1982 and in huge U.S. federal budget deficits, which acted together to create a significant demand in the United States for foreign capital. That, in turn, drove up U.S. interest rates and led to the rise of the dollar.
In 1975, U.S. exports had exceeded foreign imports by $12,400 million, but that would be the last trade surplus the United States would see in the 20th century. By 1987, the American trade deficit had swelled to $153,300 million. The trade gap began sinking in subsequent years as the dollar depreciated and economic growth in other countries led to increased demand for U.S. exports. But the American trade deficit swelled again in the late 1990s. Once again, the U.S. economy was growing faster than the economies of America's major trading partners, and Americans consequently were buying foreign goods at a faster pace than people in other countries were buying American goods. What's more, the financial crisis in Asia sent currencies in that part of the world plummeting, making their goods relatively much cheaper than American goods. By 1997, the American trade deficit $110,000 million, and it was heading higher.
American officials viewed the trade balance with mixed feelings. Inexpensive foreign imports helped prevent inflation, which some policy-makers viewed as a potential threat in the late 1990s. At the same time, however, some Americans worried that a new surge of imports would damage domestic industries. The American steel industry, for instance, fretted about a rise in imports of low-priced steel as foreign producers turned to the United States after Asian demand shriveled. And although foreign lenders were generally more than happy to provide the funds Americans needed to finance their trade deficit, U.S. officials worried that at some point they might grow wary. This, in turn, could drive the value of the dollar down, force U.S. interest rates higher, and consequently stifle economic activity.

The American Dollar and the World Economy
As global trade has grown, so has the need for international institutions to maintain stable, or at least predictable, exchange rates. But the nature of that challenge and the strategies required to meet it evolved considerably since the end of the World War II -- and they were continuing to change even as the 20th century drew to a close.
Before World War I, the world economy operated on a gold standard, meaning that each nation's currency was convertible into gold at a specified rate. This system resulted in fixed exchange rates -- that is, each nation's currency could be exchanged for each other nation's currency at specified, unchanging rates. Fixed exchange rates encouraged world trade by eliminating uncertainties associated with fluctuating rates, but the system had at least two disadvantages. First, under the gold standard, countries could not control their own money supplies rather, each country's money supply was determined by the flow of gold used to settle its accounts with other countries. Second, monetary policy in all countries was strongly influenced by the pace of gold production. In the 1870s and 1880s, when gold production was low, the money supply throughout the world expanded too slowly to keep pace with economic growth the result was deflation, or falling prices. Later, gold discoveries in Alaska and South Africa in the 1890s caused money supplies to increase rapidly this set off inflation, or rising prices.
Nations attempted to revive the gold standard following World War I, but it collapsed entirely during the Great Depression of the 1930s. Some economists said adherence to the gold standard had prevented monetary authorities from expanding the money supply rapidly enough to revive economic activity. In any event, representatives of most of the world's leading nations met at Bretton Woods, New Hampshire, in 1944 to create a new international monetary system. Because the United States at the time accounted for over half of the world's manufacturing capacity and held most of the world's gold, the leaders decided to tie world currencies to the dollar, which, in turn, they agreed should be convertible into gold at $35 per ounce.
Under the Bretton Woods system, central banks of countries other than the United States were given the task of maintaining fixed exchange rates between their currencies and the dollar. They did this by intervening in foreign exchange markets. If a country's currency was too high relative to the dollar, its central bank would sell its currency in exchange for dollars, driving down the value of its currency. Conversely, if the value of a country's money was too low, the country would buy its own currency, thereby driving up the price.
The Bretton Woods system lasted until 1971. By that time, inflation in the United States and a growing American trade deficit were undermining the value of the dollar. Americans urged Germany and Japan, both of which had favorable payments balances, to appreciate their currencies. But those nations were reluctant to take that step, since raising the value of their currencies would increases prices for their goods and hurt their exports. Finally, the United States abandoned the fixed value of the dollar and allowed it to "float" -- that is, to fluctuate against other currencies. The dollar promptly fell. World leaders sought to revive the Bretton Woods system with the so-called Smithsonian Agreement in 1971, but the effort failed. By 1973, the United States and other nations agreed to allow exchange rates to float.
Economists call the resulting system a "managed float regime," meaning that even though exchange rates for most currencies float, central banks still intervene to prevent sharp changes. As in 1971, countries with large trade surpluses often sell their own currencies in an effort to prevent them from appreciating (and thereby hurting exports). By the same token, countries with large deficits often buy their own currencies in order to prevent depreciation, which raises domestic prices. But there are limits to what can be accomplished through intervention, especially for countries with large trade deficits. Eventually, a country that intervenes to support its currency may deplete its international reserves, making it unable to continue buttressing the currency and potentially leaving it unable to meet its international obligations.

The Global Economy
To help countries with unmanageable balance-of-payments problems, the Bretton Woods conference created the International Monetary Fund (IMF). The IMF extends short-term credit to nations unable to meet their debts through conventional means (generally, by increasing exports, taking out long-term loans, or using reserves). The IMF, to which the United States contributed 25 percent of an initial $8,800 million in capital, often requires chronic debtor nations to undertake economic reforms as a condition for receiving its short-term assistance.
Countries generally need IMF assistance because of imbalances in their economies. Traditionally, countries that turned to the IMF had run into trouble because of large government budget deficits and excessive monetary growth -- in short, they were trying to consume more than they could afford based on their income from exports. The standard IMF remedy was to require strong macroeconomic medicine, including tighter fiscal and monetary policies, in exchange for short-term credits. But in the 1990s, a new problem emerged. As international financial markets grew more robust and interconnected, some countries ran into severe problems paying their foreign debts, not because of general economic mismanagement but because of abrupt changes in flows of private investment dollars. Often, such problems arose not because of their overall economic management but because of narrower "structural" deficiencies in their economies. This became especially apparent with the financial crisis that gripped Asia beginning in 1997.
In the early 1990s, countries like Thailand, Indonesia, and South Korea astounded the world by growing at rates as high as 9 percent after inflation -- far faster than the United States and other advanced economies. Foreign investors noticed, and soon flooded the Asian economies with funds. Capital flows into the Asia-Pacific region surged from just $25,000 million in 1990 to $110,000 million by 1996. In retrospect, that was more than the countries could handle. Belatedly, economists realized that much of the capital had gone into unproductive enterprises. The problem was compounded, they said, by the fact that in many of the Asian countries, banks were poorly supervised and often subject to pressures to lend to politically favored projects rather than to projects that held economic merit. When growth started to falter, many of these projects proved not to be economically viable. Many were bankrupt.
In the wake of the Asian crisis, leaders from the United States and other nations increased capital available to the IMF to handle such international financial problems. Recognizing that uncertainty and lack of information were contributing to volatility in international financial markets, the IMF also began publicizing its actions previously, the fund's operations were largely cloaked in secrecy. In addition, the United States pressed the IMF to require countries to adopt structural reforms. In response, the IMF began requiring governments to stop directing lending to politically favored projects that were unlikely to survive on their own. It required countries to reform bankruptcy laws so that they can quickly close failed enterprises rather than allowing them to be a continuing drain on their economies. It encouraged privatization of state-owned enterprises. And in many instances, it pressed countries to liberalize their trade policies -- in particular, to allow greater access by foreign banks and other financial institutions.
The IMF also acknowledged in the late 1990s that its traditional prescription for countries with acute balance-of-payments problems -- namely, austere fiscal and monetary policies -- may not always be appropriate for countries facing financial crises. In some cases, the fund eased its demands for deficit reduction so that countries could increase spending on programs designed to alleviate poverty and protect the unemployed.


Contents

At the beginning of World War II Brazil was neutral. They traded with both the Allied and Axis Forces. But after 1939 the war made trade with Europe difficult. [1] They turned to the United States as a trading partner. [1] The Americans pressured Brazil to join the Allies. This led to the Joint Brazil-U.S Defense Commission, which was designed to counter Axis influence in South America. At the beginning of 1942 Brazil permitted the US to set up air bases on its soil. This came as an agreement that the US would help establishing a national steel industry in Brazil, the Companhia Siderúrgica Nacional. This would initially help supply the Allies industrial demand for steel, and after the war, contribute to the country’s industrialization and development. Brazil also broke off diplomatic relations with Germany, Japan, and Italy.

As a result of Brazil´s decision, from the end of January to July 1942, German navy U-boats sank 13 Brazilian merchant ships, causing severe damage to Brazilian shipping. In total, 21 German and two Italian submarines caused the sinking of 36 Brazilian merchant ships causing 1,691 drownings and 1,079 other casualties. The sinkings were the main reason that led the Brazilian government to declare war against the Axis. Finally, Vargas declared war on both Germany and Italy on August 22 1942. It is known that 9 U-Boats were sunk off the Brazilian Coast over the course of the war.

The Brazilian Expeditionary Force or BEF (Portuguese: Força Expedicionária Brasileira) was a force of about 25,344 men. [2] They were organized as a division of the US Fifth Army. [2] They were delayed in getting started by difficulties in getting organized. Some in Brazil thought the government was not that anxious to send troops into battle. A popular saying at the time was that it was more likely for "snakes to smoke" (Portuguese: Cobras Fumarem) than to get the BEF going. It is the same as the saying "When pigs fly", meaning it will probably never happen. When the BEF did enter the war, they proudly wore their arm patch showing a cobra with a pipe in its mouth. They called themselves the "Smoking Cobras".

They were organized as a standard American division. [2] They wore American uniforms with Brazilian rank and unit markings. The BEF was divided into three battalions of 5,000 men each. They were the 1st, 6th and 11th regimental combat teams. Their record in Italy was impressive. At the Battle of Collecchio the BEF defeated the German 148th Division and the Italian Monte Rosa, San Marco and Italia divisions. They captured 14,700 troops and 800 officers (including 2 Generals). [2] During the eight months of battle in Italy, the BEF captured a total of 20,573 Axis soldiers. Only 450 BEF troops and 13 officers died while fighting on the front.

The Brazilian Navy and Air Force played a large role in the Battle of the Atlantic. They started in mid-1942 and operated until the end of the war in 1945. They performed anti-submarine and patrol operations in the South Atlantic. [3] They had American ships through the Lend-Lease program. [3] They acquired several submarine-chasers, 8 destroyer escorts and 3 Fleet destroyers. The larger destroyers were built in Rio de Janeiro to US designs. [3] Their Air Force received a number of modern plane types. These included Curtiss P-36 Hawks, Curtiss P-40 Warhawks and North American B-25 Mitchells. [3] For patrol aircraft they received Lockheed Hudsons, Lockheed Venturas and long range Consolidated PBY Catalina Flying boats. [3]

The effect was almost immediate. Between July and December 1943 alone, the Brazilian Air Force and Navy destroyed six German submarines. [4] Of the 7,000 Brazilian sailors who fought, about 500 were killed in action. [5] During the war the Navy protected 3,164 merchant ships. [5] Only three were sunk while under their protection. [5] Air Force pilots flew a total of 2,550 sorties. They flew only 5% of the missions in theatre. [ needs to be explained ] But they destroyed 85% of the ammunition dumps, 36% of the fuel depots and 28% of the bridges while they were active. [5]


Trade Drives America's Foreign Policy in the Late 1800's

THE MAKING OF A NATION – a program in Special English by the Voice of America.

During the second half of the 19th century, the United States was not concerned much with events in other countries. It was too busy dealing with events inside its own borders. At that time, the nation was recovering from its civil war. It was expanding to the west. It was developing industries.

As production increased, the United States began trading more and more with other countries. And it needed a new foreign policy to defend its interests. I'm Bob Doughty. Today, Maurice Joyce and Larry West discuss America's foreign policy in the late 1800s.

A growing number of lawmakers called for a new foreign policy. One was Henry Cabot Lodge of Massachusetts. Lodge said the great nations of the world were taking control of the world's undeveloped areas. As one of the great nations, Lodge said, the United States must not fall out of this line of march.

Another lawmaker said: "Fate has written our policy. The trade of the world must and shall be ours." Some of these ideas came from the writings of Captain Alfred Mahan. He was head of America's Naval War College.

Mahan wrote that all the great nations in history had possessed great sea power. He said the United States must build up its sea power, too, if it wanted to be a great nation.

Sea power, Mahan said, was more than a strong navy. It was an economy that could produce goods for export. It was trade ships that could carry the goods. It was colonies that could supply raw materials and markets. And it was overseas naval bases that could defend American interests far from home.

The Washington Post newspaper described America's growing power this way:

"A new understanding seems to have come upon us, an understanding of our strength. And with it, a new feeling -- we want to show our strength. We are face-to-face with a strange fate. The taste of empire is in the mouth of the people."

The Washington Post was not speaking for everyone, of course. In fact, many American presidents of the late 1800s did not have this taste for empire. Yet they were forced to face the future. Changes were coming. And it was their responsibility to guide the nation through the changes.

For this reason, the United States entered into several agreements with foreign lands during the late 1800s.

In 1878, for example, the United States signed a treaty with Samoa. The United States agreed to help the South Pacific islands settle any differences with other nations. A few years later, the treaty was put to a test.

A group of Germans living in Samoa forced the islands' ruler from power. They replaced him with a ruler who was more friendly to Germany.

For a time, it seemed the United States and Germany would go to war. But when American warships arrived in Samoa, so did a big storm. The storm smashed both American and German ships. Neither side was left with a force strong enough to fight.

In 1889, the United States, Germany, and Britain agreed that Samoa should be an independent kingdom. For ten years, local leaders attempted to establish a strong government. Their efforts failed. In 1899, Germany took control of Samoa's large western islands. The United States took control of the smaller islands to the east.

Events in another group of Pacific Ocean islands affected American foreign policy in the late 1800s. These were the Hawaiian islands.

Hawaii was an important port for American trade ships sailing between the United States and China. Good relations between Hawaii and the United States were necessary to keep the port open to American ships.

In 1891, Liliuokalani became queen of Hawaii. She was not friendly to the United States. A group of American businessmen and planters in Hawaii plotted to oust her.

The group started an uprising. Then it called on the United States for protection. Queen Liliuokalani was forced to surrender. The businessmen and planters formed a new government. They wanted Hawaii to be part of the United States. By the end of the century, Congress had made Hawaii an American territory.

The United States also offered to serve as a negotiator in several international disputes during the late 1800s. One dispute involved Britain and Venezuela.

Both countries claimed land that bordered the British colony of Guiana on the northeast coast of south America. The situation became tense when gold was discovered in the disputed area. The United States offered to negotiate an agreement. Britain refused the offer. The United States offered again. Britain refused again.

Finally, President Grover Cleveland asked the United States Congress to appoint a committee to decide the border. Before the American committee had a chance to Meet, Britain and Venezuela agreed to let an international committee decide.

In 1895, Cuban rebels revolted against the colonial government. They tried to destroy the economy of the island by burning private property.

Spain sent a large force to Cuba to crush the revolt. Thousands of persons were arrested and put into prison camps. Many died of hunger and disease. Spain was denounced for its cruelty.

It was difficult to get a true picture of what was happening in Cuba. American newspapers sent reporters to the island. But much of what they wrote about never happened. The reporters knew very well that exciting and horrifying stories sold newspapers. So, they made up stories about bloody battles and Spanish cruelty. One incident has become famous in American newspaper history.

Publisher William Randolph Hearst sent artist Frederic Remington to Cuba to paint pictures of the fighting. Remington spent several months in Havana. He saw no fighting. He sent Hearst a message. Things were quiet, Remington said. There would be no war. Hearst sent back this answer: "You supply the pictures. I'll supply the war."

The newspaper built up strong public feeling against Spain. Soon, many Americans were calling for war to free Cuba from Spanish rule.

William McKinley was president. He did not want the United States to become involved. He did, however, offer to help Spain find a solution that would return peace to the island. Spain refused the offer. It attempted to improve the situation in Cuba by itself.

Spain called home the military commander accused of cruelty. It stopped putting people in prison camps. It offered equal political rights to all Cubans. And it promised them self-rule in the future.

President McKinley welcomed Spain's policy statements. He felt Spain should be left alone to honor its promises to the Cuban people. He said the United States would not interfere. At about that time, however, riots broke out in Havana. President McKinley said it was his responsibility to protect the lives and property of Americans living there. So, he sent the battleship "Maine" to Havana.

During the early weeks of 1898, President McKinley waited for Spain to act on its promises to Cuba. He saw little progress. Relations between the United States and Spain became tense. Then, on the night of February fifteenth, a powerful explosion shook the battleship Maine in Havana harbor. The ship sank. More than two hundred fifty American sailors were dead.

No one knew what caused the explosion on the battleship Maine. The United States said it was an underwater bomb. Spain said it was something on the ship itself.

There was some evidence the explosion was caused by an accident in the ship's fuel tanks. Yet some people in the United States blamed Spain anyway. They demanded war. They cried: "Remember the Maine!"

That will be our story next week.

You have been listening to THE MAKING OF A NATION -- a program in Special English by the Voice of America. Your narrators were Maurice Joyce and Larry West. Our program was written by Frank Beardsley.


Second World War

The Second World War was the deadliest and most destructive global conflict in history, claiming the lives of more than 50 million people. Adolf Hitler started the war in 1939 when his German forces invaded Poland.

When did WW2 start? 1 September 1939

When did it end? 2 September 1945

Which countries were involved? The Second World War involved almost every part of the world. But the key players were the Axis powers on one side (Germany, Italy, and Japan) and on the other side
the Allies (France, Great Britain, the United States, the Soviet Union, and, to a lesser extent, China)

How many people died? It has been estimated that 50 million soldiers and civilians died in the Second World War

Why did WW2 happen? We can now say without equivocation that this was Hitler’s war, say expert historians including Professor Richard Evans, Sir Ian Kershaw and Laurence Rees

The Second World War: a timeline

Why did the Second World War happen?

10 things you (probably) didn’t know about the Second World War

How and when did the Second World War end?

In contrast with the First World War, the 1939–45 conflict has been perceived in the UK as a ‘good’ war resulting in the triumph of western democracies over evil fascist regimes, says Emma Hanna, a lecturer in the School of History at the University of Kent. The Second World War, despite its many hardships and historians’ subsequent findings to the contrary, is remembered as a time the nation put aside differences and pulled together to fight for freedom.

It is therefore unsurprising that memories of the ‘finest hour’ have been frequently invoked in the British media, particularly in times of stress and uncertainty. The fascination with the Battle of Britain continues, together with the mythology of the Blitz and the now ubiquitous ‘Keep Calm and Carry On’ poster (which was never actually deployed during the war but is now seen on mugs, tea towels and countless other products).


FROM NEUTRALITY TO ENGAGEMENT

President Franklin Roosevelt was aware of the challenges facing the targets of Nazi aggression in Europe and Japanese aggression in Asia. Although he hoped to offer U.S. support, Congress’s commitment to nonintervention was difficult to overcome. Such a policy in regards to Europe was strongly encouraged by Senator Gerald P. Nye of North Dakota. Nye claimed that the United States had been tricked into participating in World War I by a group of industrialists and bankers who sought to gain from the country’s participation in the war. The United States, Nye urged, should not be drawn again into an international dispute over matters that did not concern it. His sentiments were shared by other noninterventionists in Congress.

This protest sign shows the unwillingness of many Americans to become involved in a foreign war. A reluctance to intervene in events outside of the Western Hemisphere had characterized American foreign policy since the administration of George Washington. World War I had been an exception that many American politicians regretted making.

Roosevelt’s willingness to accede to the demands of the noninterventionists led him even to refuse assistance to those fleeing Nazi Germany. Although Roosevelt was aware of Nazi persecution of the Jews, he did little to aid them. In a symbolic act of support, he withdrew the American ambassador to Germany in 1938. He did not press for a relaxation of immigration quotas that would have allowed more refugees to enter the country, however. In 1939, he refused to support a bill that would have admitted twenty thousand Jewish refugee children to the United States. Again in 1939, when German refugees aboard the SS St. Louis, most of them Jews, were refused permission to land in Cuba and turned to the United States for help, the U.S. State Department informed them that immigration quotas for Germany had already been filled. Once again, Roosevelt did not intervene, because he feared that nativists in Congress might smear him as a friend of Jews.

To ensure that the United States did not get drawn into another war, Congress passed a series of Neutrality Acts in the second half of the 1930s. The Neutrality Act of 1935 banned the sale of armaments to warring nations. The following year, another Neutrality Act prohibited loaning money to belligerent countries. The last piece of legislation, the Neutrality Act of 1937, forbade the transportation of weapons or passengers to belligerent nations on board American ships and also prohibited American citizens from traveling on board the ships of nations at war.

Once all-out war began between Japan and China in 1937, Roosevelt sought ways to help the Chinese that did not violate U.S. law. Since Japan did not formally declare war on China, a state of belligerency did not technically exist. Therefore, under the terms of the Neutrality Acts, America was not prevented from transporting goods to China. In 1940, the president of China, Chiang Kai-shek, was able to prevail upon Roosevelt to ship to China one hundred P-40 fighter planes and to allow American volunteers, who technically became members of the Chinese Air Force, to fly them.


International Trade Agreements

E ver since Adam Smith published The Wealth of Nations in 1776, the vast majority of economists have accepted the proposition that free trade among nations improves overall economic welfare. Free trade, usually defined as the absence of tariffs, quotas, or other governmental impediments to international trade , allows each country to specialize in the goods it can produce cheaply and efficiently relative to other countries. Such specialization enables all countries to achieve higher real incomes.

Although free trade provides overall benefits, removing a trade barrier on a particular good hurts the shareholders and employees of the domestic industry that produces that good. Some of the groups that are hurt by foreign competition wield enough political power to obtain protection against imports. Consequently, barriers to trade continue to exist despite their sizable economic costs. According to the U.S. International Trade Commission, for example, the U.S. gain from removing trade restrictions on textiles and apparel would have been almost twelve billion dollars in 2002 alone. This is a net economic gain after deducting the losses to firms and workers in the domestic industry. Yet, domestic textile producers have been able to persuade Congress to maintain tight restrictions on imports.

While virtually all economists think free trade is desirable, they differ on how best to make the transition from tariffs and quotas to free trade. The three basic approaches to trade reform are unilateral, multilateral, and bilateral.

Some countries, such as Britain in the nineteenth century and Chile and China in recent decades, have undertaken unilateral tariff reductions—reductions made independently and without reciprocal action by other countries. The advantage of unilateral free trade is that a country can reap the benefits of free trade immediately. Countries that lower trade barriers by themselves do not have to postpone reform while they try to persuade other nations to follow suit. The gains from such trade liberalization are substantial: several studies have shown that income grows more rapidly in countries open to international trade than in those more closed to trade. Dramatic illustrations of this phenomenon include China’s rapid growth after 1978 and India’s after 1991, those dates indicating when major trade reforms took place.

For many countries, unilateral reforms are the only effective way to reduce domestic trade barriers. However, multilateral and bilateral approaches—dismantling trade barriers in concert with other countries—have two advantages over unilateral approaches. First, the economic gains from international trade are reinforced and enhanced when many countries or regions agree to a mutual reduction in trade barriers. By broadening markets, concerted liberalization of trade increases competition and specialization among countries, thus giving a bigger boost to efficiency and consumer incomes.

Second, multilateral reductions in trade barriers may reduce political opposition to free trade in each of the countries involved. That is because groups that otherwise would oppose or be indifferent to trade reform might join the campaign for free trade if they see opportunities for exporting to the other countries in the trade agreement. Consequently, free trade agreements between countries or regions are a useful strategy for liberalizing world trade.

The best possible outcome of trade negotiations is a multilateral agreement that includes all major trading countries. Then, free trade is widened to allow many participants to achieve the greatest possible gains from trade. After World War II, the United States helped found the General Agreement on Tariffs and Trade (GATT), which quickly became the world’s most important multilateral trade arrangement.

The major countries of the world set up the GATT in reaction to the waves of protectionism that crippled world trade during—and helped extend—the Great Depression of the 1930s. In successive negotiating “rounds,” the GATT substantially reduced the tariff barriers on manufactured goods in the industrial countries. Since the GATT began in 1947, average tariffs set by industrial countries have fallen from about 40 percent to about 5 percent today. These tariff reductions helped promote the tremendous expansion of world trade after World War II and the concomitant rise in real per capita incomes among developed and developing nations alike. The annual gain from removal of tariff and nontariff barriers to trade as a result of the Uruguay Round Agreement (negotiated under the auspices of the GATT between 1986 and 1993) has been put at about $96 billion, or 0.4 percent of world GDP.

In 1995, the GATT became the World Trade Organization (WTO), which now has more than 140 member countries. The WTO oversees four international trade agreements: the GATT, the General Agreement on Trade in Services (GATS), and agreements on trade-related intellectual property rights and trade-related investment (TRIPS and TRIMS, respectively). The WTO is now the forum for members to negotiate reductions in trade barriers the most recent forum is the Doha Development Round, launched in 2001.

The WTO also mediates disputes between member countries over trade matters. If one country’s government accuses another country’s government of violating world trade rules, a WTO panel rules on the dispute. (The panel’s ruling can be appealed to an appellate body.) If the WTO finds that a member country’s government has not complied with the agreements it signed, the member is obligated to change its policy and bring it into conformity with the rules. If the member finds it politically impossible to change its policy, it can offer compensation to other countries in the form of lower trade barriers on other goods. If it chooses not to do this, then other countries can receive authorization from the WTO to impose higher duties (i.e., to “retaliate”) on goods coming from the offending member country for its failure to comply.

As a multilateral trade agreement, the GATT requires its signatories to extend most-favored-nation (MFN) status to other trading partners participating in the WTO. MFN status means that each WTO member receives the same tariff treatment for its goods in foreign markets as that extended to the “most-favored” country competing in the same market, thereby ruling out preferences for, or discrimination against, any member country.

Although the WTO embodies the principle of nondiscrimination in international trade, article 24 of the GATT permits the formation of free-trade areas and “customs unions” among WTO members. A free-trade area is a group of countries that eliminate all tariffs on trade with each other but retain autonomy in determining their tariffs with nonmembers. A customs union is a group of countries that eliminate all tariffs on trade among themselves but maintain a common external tariff on trade with countries outside the union (thus technically violating MFN).

The customs union exception was designed, in part, to accommodate the formation of the European Economic Community (EC) in 1958. The EC, originally formed by six European countries, is now known as the european union (EU) and includes twenty-seven European countries. The EU has gone beyond simply reducing barriers to trade among member states and forming a customs union. It has moved toward even greater economic integration by becoming a common market—an arrangement that eliminates impediments to the mobility of factors of production, such as capital and labor, between participating countries. As a common market, the EU also coordinates and harmonizes each country’s tax, industrial, and agricultural policies. In addition, many members of the EU have formed a single currency area by replacing their domestic currencies with the euro.

The GATT also permits free-trade areas (FTAs), such as the European Free Trade Area, which is composed primarily of Scandinavian countries. Members of FTAs eliminate tariffs on trade with each other but retain autonomy in determining their tariffs with nonmembers.

One difficulty with the WTO system has been the problem of maintaining and extending the liberal world trading system in recent years. Multilateral negotiations over trade liberalization move very slowly, and the requirement for consensus among the WTO’s many members limits how far agreements on trade reform can go. As Mike Moore, a recent director-general of the WTO, put it, the organization is like a car with one accelerator and 140 hand brakes. While multilateral efforts have successfully reduced tariffs on industrial goods, it has had much less success in liberalizing trade in agriculture, textiles, and apparel, and in other areas of international commerce. Recent negotiations, such as the Doha Development Round, have run into problems, and their ultimate success is uncertain.

As a result, many countries have turned away from the multilateral process toward bilateral or regional trade agreements. One such agreement is the North American Free Trade Agreement (NAFTA), which went into effect in January 1994. Under the terms of NAFTA, the United States, Canada, and Mexico agreed to phase out all tariffs on merchandise trade and to reduce restrictions on trade in services and foreign investment over a decade. The United States also has bilateral agreements with Israel, Jordan, Singapore, and Australia and is negotiating bilateral or regional trade agreements with countries in Latin America, Asia, and the Pacific. The European Union also has free-trade agreements with other countries around the world.

The advantage of such bilateral or regional arrangements is that they promote greater trade among the parties to the agreement. They may also hasten global trade liberalization if multilateral negotiations run into difficulties. Recalcitrant countries excluded from bilateral agreements, and hence not sharing in the increased trade these bring, may then be induced to join and reduce their own barriers to trade. Proponents of these agreements have called this process “competitive liberalization,” wherein countries are challenged to reduce trade barriers to keep up with other countries. For example, shortly after NAFTA was implemented, the EU sought and eventually signed a free-trade agreement with Mexico to ensure that European goods would not be at a competitive disadvantage in the Mexican market as a result of NAFTA.

But these advantages must be offset against a disadvantage: by excluding certain countries, these agreements may shift the composition of trade from low-cost countries that are not party to the agreement to high-cost countries that are.

Suppose, for example, that Japan sells bicycles for fifty dollars, Mexico sells them for sixty dollars, and both face a twenty-dollar U.S. tariff. If tariffs are eliminated on Mexican goods, U.S. consumers will shift their purchases from Japanese to Mexican bicycles. The result is that Americans will purchase from a higher-cost source, and the U.S. government receives no tariff revenue. Consumers save ten dollars per bicycle, but the government loses twenty dollars. Economists have shown that if a country enters such a “trade-diverting” customs union, the cost of this trade diversion may exceed the benefits of increased trade with the other members of the customs union. The net result is that the customs union could make the country worse off.

Critics of bilateral and regional approaches to trade liberalization have many additional arguments. They suggest that these approaches may undermine and supplant, instead of support and complement, the multilateral WTO approach, which is to be preferred for operating globally on a nondiscriminatory basis. Hence, the long-term result of bilateralism could be a deterioration of the world trading system into competing, discriminatory regional trading blocs, resulting in added complexity that complicates the smooth flow of goods between countries. Furthermore, the reform of such issues as agricultural export subsidies cannot be dealt with effectively at the bilateral or regional level.

Despite possible tensions between the two approaches, it appears that both multilateral and bilateral/regional trade agreements will remain features of the world economy. Both the WTO and agreements such as NAFTA, however, have become controversial among groups such as antiglobalization protesters, who argue that such agreements serve the interests of multinational corporations and not workers, even though freer trade has been a time-proven method of improving economic performance and raising overall incomes. To accommodate this opposition, there has been pressure to include labor and environmental standards in these trade agreements. Labor standards include provisions for minimum wages and working conditions, while environmental standards would prevent trade if environmental damage was feared.

One motivation for such standards is the fear that unrestricted trade will lead to a “race to the bottom” in labor and environmental standards as multinationals search the globe for low wages and lax environmental regulations in order to cut costs. Yet there is no empirical evidence of any such race. Indeed, trade usually involves the transfer of technology to developing countries, which allows wage rates to rise, as Korea’s economy—among many others—has demonstrated since the 1960s. In addition, rising incomes allow cleaner production technologies to become affordable. The replacement of pollution-belching domestically produced scooters in India with imported scooters from Japan, for example, would improve air quality in India.


Labor unions
and environmentalists in rich countries have most actively sought labor and environmental standards. The danger is that enforcing such standards may simply become an excuse for rich-country protectionism, which would harm workers in poor countries. Indeed, people in poor countries, whether capitalists or laborers, have been extremely hostile to the imposition of such standards. For example, the 1999 WTO meeting in Seattle collapsed in part because developing countries objected to the Clinton administration’s attempt to include labor standards in multilateral agreements.

A safe prediction is that international trade agreements will continue to generate controversy.


Did the Axis engage in trade with other countries during the war? - History

The Department of Homeland Security does not have official records from this time period.

The beautiful land of the New World amazed the European explorers who arrived on North American shores around 1500. They realized the economic possibilities of the fertile soil and many natural resources. In the 17th century, Europeans established successful permanent settlements in what is now the United States. The European settlers soon dominated the Native American civilizations, which had existed for thousands of years. The major European powers (including England, Spain, and France) established colonies,

which are lands controlled by a faraway government. The people who lived in the colonies were called colonists. Enduring great hardship, the colonists built new communities in the New World

In 1492, Christopher Columbus, an Italian explorer and excellent sailor, crossed the Atlantic Ocean in search of a shorter trade route to Asia. After more than two months at sea, he landed in the Bahamas in the Caribbean islands. Although Columbus never reached the mainland of North America, he had discovered the gateway to a vast continent unexplored by Europeans. Columbus returned to Europe believing he had reached previously unknown islands in Asia. Word of the new route spread in Europe. Over the next few decades, other explorers followed in Columbus's wake, hoping to take advantage of the shortcut to Asia. It would be another Italian explorer, named Amerigo Vespucci, who realized that what had actually been discovered was a continent unknown to Europeans. He called it the New World.

European nations&mdashincluding Spain, France, the Netherlands, Portugal, Sweden, and England&mdashvied to claim pieces of the new land. In the 1600s, England founded colonies along the Atlantic seaboard, from what is now New Hampshire to Georgia. These original 13 colonies would eventually become the United States of America. Spain founded a colony at Saint Augustine, Florida, as early as 1565 and would go on to claim parts of what are now the states of Texas, New Mexico, Arizona, and California. France established colonies along the Saint Lawrence River, in what is now Canada and also in the southern part of North America, in the region that is now Louisiana. The Dutch began the settlement of New Amersterdam on the southern tip of what is now Manhattan Island, home to part of New York City. The European countries often fought each over ownership of the new land more land meant more power and economic opportunity.

In 1607, England sent 100 men to America to found a new colony. The colony was named Jamestown after King James I and was located on the coast of what is now Virginia. It would become the first English colony to succeed in America, but its beginning was exceptionally difficult. The colonists were hoping to find gold easily, but didn't. And tragically, they hadn't anticipated how hard it would be to survive in the New World. More than half of the settlers died in the first year because of the harsh winters, poor planning, and disease. But under the leadership of the colonist John Smith, the colony began to succeed. They grew tobacco, which was sent back to England and sold for profit. With the profit, the colonists had the money to plant other crops, such as wheat, grapes, and corn, which is a food native to North America. By 1620, Jamestown plus other settlements that sprang up nearby had a population of about 4,000. The colony was thriving. This economic success gave England a powerful interest in protecting its foothold in the New World.

Africans first arrived in North America in 1619. In that year, 20 African people were brought to the Jamestown colony aboard a Dutch warship. They were slaves. They had been taken from their homes in Africa by force. They were beaten and enchained by men carrying weapons. Over the next almost 200 years, hundreds of thousands of Africans would be brought to America as slaves to work on plantations, especially to grow tobacco. By the end of the colonial period, Africans numbered about 500,000 and formed about 20 percent of the population of the United States.

Some colonies were formed because people wanted to escape religious persecution in Europe. In 17th century England, two groups of Christians, the Catholics and the Anglicans, were arguing over what religion and church should be the true church of England. Some of the Anglicans, called Puritans, thought that there should be more distinction between their Church of England and the Catholic Church. Some Puritans, called the Separatists, didn't want to belong to the Church of England at all anymore. King James, who was the head of the Church of England, would not allow the Separatists to practice religion on their own. To escape the situation in England, a small group of Separatists left Europe on the Mayflower ship. In 1620, the ship landed at what is now Plymouth, Massachusetts, carrying 102 passengers. Many were Separatists, who became known as the Pilgrims. They established Plymouth Colony.
After the Pilgrims, many more people flocked to the new colonies for religious reasons: About 200,000 Puritans emigrated from England during the years 1620 to 1641.

After the Pilgrims, many other immigrants came to America for the religious freedom it offered. The colony of Maryland was founded in 1634 as a refuge for Catholics, who were persecuted in England in the 17th century. In 1681, William Penn began a Quaker colony in the land that was later named after him: Pennsylvania. The main settlement was Philadelphia, which prospered through farming and commerce. In 1685, 14,000 Huguenots who were persecuted in France also joined the growing English colonies.

Early immigrants to America settled up and down the East Coast. Farming was difficult in the rocky soil of New England, so people grew only enough food for their families to live on. This is called subsistence farming. They also became fishermen, fishing cod in the Atlantic Ocean and selling it to the European markets. As they needed good ships for fishing, they started making them, becoming successful shipbuilders.
In the South, where farming was easier, colonists started large plantations to grow crops, such as tobacco, rice, and indigo. Indigo was a rich blue dye, mainly used for dyeing textiles. Plantations depended on the free labor of the slaves. Many more slaves were forced to come to America to meet the demand for labor.
By the time of the Revolutionary War, about 2.5 million people lived in the colonies, including approximately 450,000 Africans 200,000 Irish 500,000 Scottish and Scotch-Irish 140,000 Germans and 12,000 French.

As the colonies grew, people began to look past the natural barrier of the Appalachian Mountains. They moved west into the frontier lands, in what is now Ohio, and beyond.

The colonies grew prosperous and the population increased. Between the time of the first settlements and the Revolutionary War, about seven generations of people were born in America. Many of them no longer wanted to be ruled by the English throne. And they didn't want to pay taxes to the English government when they had no colonial representation in the Parliament. They became known as Patriots, or Whigs, and they included Thomas Jefferson and John Adams.
The Loyalists were colonists who wanted to remain part of England. The Patriots and Loyalists were bitterly divided on the issue. In 1776, the Continental Congress, a group of leaders from each of the 13 colonies, issued the Declaration of Independence. The Declaration stated that the United States of America was its own country.
The Patriots fought England in the Revolutionary War to gain independence for the colonies.

In 1783, with the help of the French, who had joined their side, the colonists won the war. The United States of America was a new nation.
The new government conducted a census, or count, of everyone living in the United States. At the time of the first census in 1790, nearly 700,00 Africans and 3 million Europeans lived in the new United States.

Expanding America 1790-1880

In the decades after the Revolutionary War, the 13 original colonies grew to include states stretching from Maine in the north to Louisiana in the south from the Atlantic Ocean in the east to Illinois in the west. As a new nation, the United States of America thrived. By 1820, the population had grown to nearly 10 million people. The quality of life for ordinary people was improving. People were moving west, creating towns along the route of the Transcontinental Railroad, which connected the entire country by rail, east to west, for the first time.

The prosperous young country lured Europeans who were struggling with population growth, land redistribution, and industrialization, which had changed the traditional way of life for peasants. These people wanted to escape poverty and hardship in their home countries. More than 8 million would come to the United States from 1820 to 1880.

At the turn of the 19th century, more than 1 million African Americans lived in the United States. As slaves, they were not considered citizens. Large farms and plantations depended on the free labor they provided in fields and homes. It was difficult, backbreaking work.
In 1808, the United States government banned the importation of enslaved people into the country, although the practice did continue illegally. Slavery, however, was not abolished for nearly 60 more years.

In the early and mid-19th century, nearly all of the immigrants coming to the United States arrived from northern and western Europe. In 1860, seven out of 10 foreign-born people in the United States were Irish or German. Most of the Irish were coming from poor circumstances. With little money to travel any further, they stayed in the cities where they arrived, such as Boston and New York City. More than 2,335,000 Irish arrived between 1820 and 1870.
The Germans who came during the time period were often better off than the Irish were. They had enough money to journey to the Midwestern cities, such as Chicago, Cincinnati, and St. Louis, or to claim farmland. More than 2,200,000 Germans arrived between 1820 and 1870.

In 1845, a famine began in Ireland. A potato fungus, also called blight, ruined the potato crop for several years in a row. Potatoes were a central part of the Irish diet, so hundreds of thousands of people now didn't have enough to eat. At the same time of the famine, diseases, such as cholera, were spreading. Starvation and disease killed more than a million people.
These extreme conditions caused mass immigration of Irish people to the United States. Between 1846 and 1852, more than a million Irish are estimated to have arrived in America. The men found jobs building railroads, digging canals, and working in factories they also became policemen and firemen. Irish women often worked as domestic servants. Even after the famine ended, Irish people continued to come to America in search of a better life. More than 3.5 million Irish in total had arrived by 1880.

Civil War and the End of Slavery

In the early 1860s, the United States was in crisis. The Northern states and Southern states could not agree on the issue of slavery. Most people in the Northern states thought slavery was wrong. People in South, where the plantations depended on slavery, wanted to continue the practice. In 1861, the Civil War began between the North and South. It would be an extremely bloody war over 600,000 people would die in the fighting.
Many immigrants fought in the war. Since immigrants had settled mostly in the North, where factories provided jobs and small farms were available, hundreds of thousands of foreign-born men fought for the Union.
In 1863, President Abraham Lincoln issued the Emancipation Proclamation, which declared that all the slaves in the rebelling Southern states were free. It was the beginning of the end of slavery.

To ensure that the abolishment of slavery was permanent, Congress passed the 13th Amendment to the Constitution, which outlawed slavery throughout the United States. The 14th Amendment, adopted in 1868, declared that African Americans were citizens of the United States. In 1870, African Americans numbered almost 5 million and made up 12.7 percent of the U.S. population.

In the late 19th century, America was looking west. People began moving away from the now crowded Eastern cities. Some were motivated by the Homestead Act of 1862, which offered free land from the government. The government offered to give 160 acres of land&mdashconsidered a good size for a single family to farm&mdashin areas including Minnesota, Iowa, Kansas, and Nebraska. Homesteaders were required to stay on the land, build a home, and farm the land for five years. The offer attracted migrants from inside the country&mdashand waves of more immigrants from Europe. For example, many people from Sweden, where land was extremely scarce, were drawn to come to the United States. These brave settlers worked hard to start a new life on the frontier. Though life was difficult, many succeeded.

The Transcontinental Railroad

The Transcontinental Railroad was a massive construction project that linked the country by rail from east to west. The railway was built entirely by hand during a six-year period, with construction often continuing around the clock. Chinese and Irish immigrants were vital to the project. In 1868, Chinese immigrants made up about 80 percent of the workforce of the Central Pacific Railroad, one of the companies building the railway. The workers of the Union Pacific Railroad, another company that built the railroad, were mostly Irish immigrants. These railroad workers labored under dangerous conditions, often risking their lives. After the Transatlantic Railroad was completed, cities and towns sprung up all along its path, and immigrants moved to these new communities. The Transcontinental Railroad was a radical improvement in travel in the United States after its completion, the trip from East Coast to West Coast, which once took months, could be made in five days.

The American Dream 1880-1930

By 1880, America was booming. The image of America as a land of promise attracted people from all over the world. On the East Coast, Ellis Island welcomed new immigrants, largely from Europe. America was "the golden door," a metaphor for a prosperous society that welcomed immigrants. Asian immigrants, however, didn't have the same experience as European immigrants. They were the focus of one of the first major pieces of legislation on immigration. The Chinese Exclusion Act of 1882 severely restricted immigration from China.

And the 1907 "Gentlemen's Agreement" between Japan and the United States was an informal agreement that limited immigration from Japan. Despite those limitations, nearly 30 million immigrants arrived from around the world during this great wave of immigration, more than at any time before.

In 1892, President Benjamin Harrison designated Ellis Island in New York Harbor as the nation's first immigration station. At the time, people traveled across the Atlantic Ocean by steamship to the bustling port of New York City. The trip took one to two weeks, much faster than in the past (when sailing ships were the mode of transportation), a fact that helped fuel the major wave of immigration.
For many immigrants, one of their first sights in America was the welcoming beacon of the Statue of Liberty, which was dedicated in 1886. Immigrants were taken from their ships to be processed at Ellis Island before they could enter the country.
About 12 million immigrants would pass through Ellis Island during the time of its operation, from 1892 to 1954. Many of them were from Southern and Eastern Europe. They included Russians, Italians, Slavs, Jews, Greeks, Poles, Serbs, and Turks.
Explore the Ellis Island Interactive Tour

New immigrants flooded into cities. In places like New York and Chicago, groups of immigrants chose to live and work near others from their home countries. Whole neighborhoods or blocks could be populated with people from the same country. Small pockets of America would be nicknamed "Little Italy" or "Chinatown." Immigrants often lived in poor areas of the city. In New York, for example, whole families crowded into tiny apartments in tenement buildings on the Lower East Side of Manhattan.
Many organizations were formed to try to help the new immigrants adjust to life in America. Settlement houses, such as Hull House in Chicago, and religious-based organizations worked to help the immigrants learn English and life skills, such as cooking and sewing.

On the West Coast, Asian immigrants were processed at Angel Island, often called the "Ellis Island of the West." Angel Island, which lies off the coast of San Francisco, opened in 1910. Although the Chinese Exclusion Act of 1882 restricted immigration, 175,000 Chinese came through Angel Island over a period of three decades. They were overwhelmingly the main group processed here: In fact, 97 percent of the immigrants who passed through Angel Island were from China.
Explore the Angel Island Activity

Many of the immigrants who arrived in the early 20th century were poor and hardworking. They took jobs paving streets, laying gas lines, digging subway tunnels, and building bridges and skyscrapers. They also got jobs in America's new factories, where conditions could be dangerous, making shoes, clothing, and glass products. Immigrants fueled the lumber industry in the Pacific Northwest, the mining industry in the West, and steel manufacturing in the Midwest. They went to the territory of Hawaii to work on sugar cane plantations. Eventually, they bargained for better wages and improved worker safety. They were on the road to becoming America's middle class.

By the 1920s, America had absorbed millions of new immigrants. The country had just fought in the "Great War", as World War I was known then. People became suspicious of foreigners' motivations. Some native-born Americans started to express their dislike of foreign-born people. They were fearful that immigrants would take the available jobs. Some Americans weren't used to interacting with people who spoke different languages, practiced a different religion, or were a different race. Racism, anti-Semitism, and xenophobia (fear and hatred of foreigners) were the unfortunate result.
In 1924, Congress passed the National Origins Act. It placed restrictions and quotas on who could enter the country.
The annual quotas limited immigration from any country to 3 percent of the number of people from that country who were living in the United States in 1890. The effect was to exclude Asians, Jews, blacks, and non-English speakers.

A Place of Refuge 1930-1965

The Great Depression and War in Europe

In the 1930s, the country was going through the Great Depression, a terrible period of economic hardship. People were out of work, hungry, and extremely poor. Few immigrants came during this period in fact, many people returned to their home countries. Half a million Mexicans left, for example, in what was known as the Mexican Repatriation. Unfortunately, many of those Mexicans were forced to leave by the U.S. government.
In 1933, the Immigration and Naturalization Service (INS) was formed. It still exists today.
In 1938, World War II started in Europe. America was again concerned about protecting itself. Fears about foreign-born people continued to grow.
As a result of the turmoil in the 1930s, immigration figures dropped dramatically from where they had been in previous decades. In the 1920s, approximately 4,300,000 immigrants came to the United States in the 1930s, fewer than 700,000 arrived.

World War II and the Postwar Period

The United States entered World War II in 1942. During the war, immigration decreased. There was fighting in Europe, transportation was interrupted, and the American consulates weren't open. Fewer than 10 percent of the immigration quotas from Europe were used from 1942 to 1945.
In many ways, the country was still fearful of the influence of foreign-born people. The United States was fighting Germany, Italy, and Japan (also known as the Axis Powers), and the U.S. government decided it would detain certain resident aliens of those countries. (Resident aliens are people who are living permanently in the United States but are not citizens.) Oftentimes, there was no reason for these people to be detained, other than fear and racism.
Beginning in 1942, the government even detained American citizens who were ethnically Japanese. The government did this despite the 14th Amendment of the Constitution, which says "nor shall any State deprive any person of life, liberty or property without the due process of law."

Also because of the war, the Chinese Exclusion Act was repealed in 1943. China had quickly become an important ally of the United States against Japan therefore, the U.S. government did away with the offensive law. Chinese immigrants could once again legally enter the country, although they did so only in small numbers for the next couple of decades.
After World War II, the economy began to improve in the United States. Many people wanted to leave war-torn Europe and come to America. President Harry S. Truman urged the government to help the "appalling dislocation" of hundreds of thousands of Europeans. In 1945, Truman said, "everything possible should be done at once to facilitate the entrance of some of these displaced persons and refugees into the United States. "
On January 7, 1948, Truman urged Congress to "pass suitable legislation at once so that this Nation may do its share in caring for homeless and suffering refugees of all faiths.

I believe that the admission of these persons will add to the strength and energy of the Nation."
Congress passed the Displaced Persons Act of 1948. It allowed for refugees to come to the United States who otherwise wouldn't have been allowed to enter under existing immigration law. The Act marked the beginning of a period of refugee immigration.

In 1953, the Refugee Relief Act was passed to replace the Displaced Persons Act of 1948, which had expired. It also allowed non-Europeans to come to the United States as refugees.
The Refugee Relief Act also reflected the U.S. government's concern with Communism, a political ideology that was gaining popularity in the world, particularly in the Soviet Union. The Soviet Union was also controlling the governments of other countries. The Act allowed people fleeing from those countries to enter the United States.
When he signed the Act, President Dwight D. Eisenhower said, "This action demonstrates again America's traditional concern for the homeless, the persecuted, and the less fortunate of other lands. It is a dramatic contrast to the tragic events taking place in East Germany and in other captive nations."
By "captive nations," Eisenhower meant countries being dominated by the Soviet Union.

In 1956, there was a revolution in Hungary in which the people protested the Soviet-controlled government. Many people fled the country during the short revolution. They were known as "fifty-sixers". About 36,000 Hungarians came to the United States during this time. Some of their countrymen also moved to Canada.
In 1959, Cuba experienced a revolution, and Fidel Castro took over the government. His dictatorship aligned itself with the Soviet Union. More than 200,000 Cubans left their country in the years after the revolution many of them settled in Florida.

Building a Modern America 1965-Today

A major change to immigration legislation in 1965 paved the way for new waves of immigration from all over of the world. Asians and Latin Americans arrived in large numbers, while European immigration declined.

Today, immigration to the United States is at its highest level since the early 20th century. In fact, as a result of the variety of these recent immigrants, the United States has become a truly multicultural society. The story of America &mdash who we are and where we come from &mdash is still being written.

Immigration and Naturalization Act of 1965

In 1965, President Lyndon B. Johnson signed the 1965 Immigration and Naturalization Act, also known as the Hart-Celler Act. This act repealed the quota system based on national origins that had been in place since 1921. This was the most significant change to immigration policy in decades. Instead of quotas, immigration policy was now based on a preference for reuniting families and bringing highly skilled workers to the United States. This was a change because in the past, many immigrants were less skilled and less educated than the average American worker. In the modern period, many immigrants would be doctors, scientists, and high-tech workers.
Because Europe was recovering from the war, fewer Europeans were deciding to move to America.
But people from the rest of world were eager to move here. Asians and Latin Americans, in particular, were significant groups in the new wave of immigration. Within five years after the act was signed, for example, Asian immigration had doubled.

Vietnamese Immigration and the Refugee Act

During the 1960s and 1970s, America was involved in a war in Vietnam. Vietnam is located in Southeast Asia, on the Indochina peninsula. From the 1950s into the 1970s there was a great deal of conflict in the area. After the war, Vietnamese refugees started coming to the United States. During the 1970s, about 120,000 Vietnamese came, and hundreds of thousands more continued to arrive during the next two decades.
In 1980, the government passed the Refugee Act, a law that was meant specifically to help refugees who needed to come to the country.
Refugees come because they fear persecution due to their race, religion, political beliefs, or other reasons. The United States and other countries signed treaties, or legal agreements, that said they should help refugees. The Refugee Act protected this type of immigrant's right to come to America.

Latin American Immigration

During the 1980s, waves of immigrants arrived from Central America, the Caribbean, and South America. Hundreds of thousands of people came just from Cuba, fleeing the oppressive dictatorship of Fidel Castro. This was a significant new wave of immigrants: During the 1980s, 8 million immigrants came from Latin America, a number nearly equal to the total figure of European immigrants who came to the United States from 1900 to 1910, when European immigration was at a high point. The new immigrants changed the makeup of America: By 1990, Latinos in the United States were about 11.2 percent of the total population.

Since 1990, immigration has been increasing. It is at its highest point in America's history. In both the 1990s and 2000s, around 10 million new immigrants came to the United States. The previous record was from 1900 to 1910, when around 8 million immigrants arrived.

In 2000, the foreign-born population of the United States was 28.4 million people. Also in that year, California became the first state in which no one ethnic group made up a majority.

Today, more than 80 percent of immigrants in the United States are Latin American or Asian. By comparison, as recently as the 1950s, two-thirds of all immigrants to the United States came from Europe or Canada.

The main countries of origin for immigrants today are Mexico, the Philippines, China, Cuba, and India. About 1 in 10 residents of the United States is foreign-born. Today, the United States is a truly multicultural society.


Retaliatory Tariffs Imposed and Threatened

Several jurisdictions have proposed and imposed retaliatory tariffs against the United States as laid out in Tables 4 and 5.

Retaliation against Section 232 steel and aluminum tariffs target over $9 billion worth of American products, for an estimated total tax of $2.11 billion. Note: Tariff revenues were calculated for the EU and China by averaging the tariff rates and multiplying by the affected amount of U.S. goods. Tariff revenues for Turkey, India, and Russia were based on news reports.

Note: Mexico and Canada lifted their retaliatory tariffs in May 2019.

Source: Congressional Research Service, “Escalating U.S. Tariffs: Affected Trade,” last updated Sept. 12, 2019, https://fas.org/sgp/crs/row/IN10971.pdf author calculations tariff announcements.

China has responded to the United States’ Section 301 tariffs with several rounds of tariffs and proposed tariffs on more than $106 billion worth of U.S. goods, for an estimated tax of nearly $11.6 billion. Note that the proposed stage 4b tariffs are not included in the analysis of economic effects due to their cancellation under Phase 1 of the U.S.-China trade deal and that tariffs imposed on goods in September would be reduced from 10 percent and 5 percent to 5 percent and 2.5 percent, respectively, reducing tariffs on approximately $75 billion worth of goods. Note we reduced the average rate on Stage 3 and Stage 4a tariffs to account for the Phase 1 trade deal reductions.

Note: Tariff revenues were calculated by averaging the tariff rates and multiplying by the affected amount of U.S. goods.

*Stage 4b tariffs and auto tariffs have been removed from the model results due to Phase 1 of U.S.-China trade deal.

Source: Congressional Research Service, “Escalating U.S. Tariffs: Affected Trade,” last updated Sept. 12, 2019, https://fas.org/sgp/crs/row/IN10971.pdf author calculations.

We estimate that retaliatory tariffs stemming from Section 232 and Section 301 actions total to approximately $13.7 billion. However, it is important to note that these tariffs are not paid to the United States government, but to the governments of the countries which impose the tariffs.

Model Results

The Tax Foundation model estimates that U.S. GDP would fall another 0.04 percent ($9.79 billion) and cost an additional 30,300 full-time equivalent jobs if all retaliatory tariffs were imposed.

It is important to note, however, that unlike the tariffs that the United States could impose, which would raise some federal revenue, tariffs imposed by foreign jurisdictions would raise no revenue, but result in lower U.S. output.

Note: Totals may not add due to rounding.

Source: Tax Foundation Taxes and Growth Model, March 2018


Good Neighbor Policy

The Good Neighbor Policy phrase was coined by President Herbert Hoover, not President Franklin Roosevelt. Hoover was on a goodwill trip to Latin America soon after his election in 1928 when he gave a speech in Honduras announcing, "We have a desire to maintain not only the cordial relations of governments with each other, but also the relations of good neighbors."

The intention of the new policy was to mend relations with Latin American countries after they criticized The Coolidge Administration during the Sixth Pan-American Conference in Havana in 1928 for armed interventions in Haiti and Nicaragua. U.S. relations with Latin America were at an all-time low.

During The Hoover Administration, policies were put into place to improve relations, such as the Clark Memorandum of 1930 in which the State Department retracted Theodore Roosevelt's Corollary to the 1823 Monroe Doctrine, which declared that only the United States could collect debts owed to foreigners by countries in the Western Hemisphere. The Clark Memorandum did not, however, repudiate the right to intervention itself. Also, Hoover's withdrawal of troops from Nicaragua and planned removal from Haiti improved relations with Latin America. In President Franklin Roosevelt's inaugural address, he also promised to improve relations with Latin America by stating, "In the field of world policy, I dedicate this nation to the policy of the good neighbor — the neighbor who resolutely respects himself and, because he does so, respects the rights of others." President Roosevelt did much to improve relations by assigning Secretary of State Cordell Hull to carry out his vision of this policy, which was to improve the ties between those countries and the United States to ensure non-hostile neighbors south of its borders. In addition, the policy sought to secure Latin American cooperation in the world war effort by maintaining the flow of petroleum and other raw materials.

Hull's policies of low tariffs improved the economies of the Latin American countries that had been hurt by the Smoot-Hawley Tariff of 1930, especially in Cuba where low prices on sugar had previously made it impossible to sell to the United States. Also the Panama Canal Treaty was re-negotiated in 1936. In addition, when the United States restrained from intervening when Mexico expropriated foreign oil companies in 1938, both countries were able to arrange an amicable settlement. In other efforts, Hull convened the Seventh Montevideo-Pan-American Conference in 1933 in Uruguay, where he committed to a policy of non-intervention into the affairs of Latin American countries. As evidence of his commitment, U.S. Marines were removed from Haiti in 1934 and Congress signed a treaty with Cuba nullifying the 1903 Platt Amendment, which authorized United States occupation of that country. At the Conference for the Maintenance of Peace in Buenos Aires in 1936, the American nations agreed to mutual consultation if there was a security threat to any of the nations within the hemisphere. At the Eighth Pan-American Conference, held in Lima, Peru, Hull managed to obtain a resolution reasserting a united front against possible Axis aggression against American nations during the war, even though most Latin American countries at the time were ruled by generals who admired European facism.

Great strides had been made to improve relations between the United States and Latin America during World War II so that after the war's end, the U.S. was able to pursuade Latin American countries to join the Organization of American States, a regional organization under the United Nations that was largely funded by the United States. However, postwar policies toward Latin American countries began to erode the previous progress made in those relationships when a newly structured economic power restored the monetary and financial strength of industrial countries, but largely ignored Latin America. The Good Neighbor Policy and the Pan-American "war propaganda" were further abandoned when the United States ignored free trade overtures and viewed Latin America merely as a supplier of raw materials and tropical foodstuffs. As a result, Brazil began to restrict imports and to subsidize domestic industries, while drawing foreign companies to invest in Latin America caused friction with the United States, whose control over those economies began to slip. During the Cold War (1946-1989), the threat of Communist infiltration into poverty-striken neighbors to the south caused the United States to once again intervene. Examples included Guatemala, where the CIA secretly intervened in 1954, and in Cuba, where Fidel Castro, with his rise to power in 1959, installed a government backed by the Soviet Union. The United States tried unsuccessfully to subvert the revolution in Cuba through the Bay of Pigs Invasion by Cuban exiles in 1961. Castro allowed the Soviet Union to place nuclear missiles in Cuba a year later, to defend the island against continued threats from the United States. Those missiles were later removed, but Cuba continued to receive aid from the Soviet Union. The U.S., concerned with possible further infiltration by the Soviet Union with foreign aid and military assistance to other Latin American countries, increased its own contribution of foreign aid and technical advice through its Alliance for Progress program — and subsidized secret police and armies throughout the region. During the 1970s, Latin America was hurt by a jump in oil prices and a subsequent decline in foreign investment in those countries. Those countries expanded their investments in their own countries by amassing huge amounts of debt from money provided by international banks. Because of improper guidance and corruption elements within those governments, their debts became unpayable by 1980, and the military governments still in power resigned, leaving common citizens to run the government. Little was done by the United States to deal with those debts, which were associated with the decline of U.S. trade and investment in Latin America. But the U.S. continued to intervene when they invaded Grenada in 1983 where a leftist movement rose to power. They also funded Honduran-based guerrillas to fight the Nicaraguans and other covert operations to prevent further communist infiltration. Other issues, such as the massive illegal immigration to the United States, the importation of drugs, and environmental degradation, further complicated relations with countries south of the border. But as the presence of Americans of Latin American descent grew, their influence culturally and politically helped to strengthen the bonds with those countries. In addition, as the United States began to be less competitive in foreign markets, discussions of a free trade area began to take place. In a more recent version of the Good Neighbor Policy, the world's largest free trade area was created when the United States, Canada and Mexico launched the North American Free Trade Agreement (NAFTA). That 1994 agreement has brought economic growth and higher standards of living for all three countries and is committed to helping the partners to realize a more integrated and efficient North American economy. In March 2002, Assistant Secretary of State for Western Hemisphere Affairs, Otto J. Reich, spoke at the Center for Strategic and International Studies in Washington, D.C., regarding President George W. Bush's hemispheric policies. In his speech, Reich spoke of the challenges facing Latin American countries after a decade of reforms. Although the U.S. and other countries had experienced economic slowdowns, some Latin American countries were weathering the storm due to ". maintaining the course on reforms, maintaining fiscal descipline, liberalizing trade regimes, privatizing inefficient state industries, deregulating internal markets and investing in their own people." Reich spoke eloquently of the Bush administration's version of the Good Neighbor Policy, stating,


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