During the 1920s, European nations retaliated against U.S. tariff hikes by increasing their own tariffs. Rising tariffs resulted in __________.Select one of the options below as your answer:

A. European countries defaulting on debt payments
B. international cut-throat competition
C. decreased sales for exporters like farmers
D. all of the above

Question

During the 1920s, European nations retaliated against U.S. tariff hikes by increasing their own tariffs. Rising tariffs resulted in __________.Select one of the options below as your answer:

A. European countries defaulting on debt payments
B. international cut-throat competition
C. decreased sales for exporters like farmers
D. all of the above

anonymous · Answer

C, I think.  There were some notable defaults on debt in the 30s -- I think the Brits defaulted on some war debt to the US, and of course the Germans later entirely repudiated their reparations bill (which is not the same thing).   And you can definitely trace some of that to the problem of acquiring dollars by foreign nations when international trade was in steep decline.  But it would be overly simplistic to pin the entire cause of default on the tariff wars.

I don't really know what "international cut-throat competition" even means, really.  Competition in what area?  Political?  Economic?  Between nations?  Between international corporations?  Still, it seems unlikely tariffs could lead to competition per se, because their principle effect was to discourage corporations from international trade.