When Tariffs Trigger Economic Collapse: Why 1922 Looks Eerily Like Today's Political Rhetoric

History doesn’t repeat, but it rhymes. America’s Fordney-Macomber Tariff of 1922 is basically the grandfather of every “protect domestic industry” policy—and it’s a masterclass in how good intentions destroy economies.

The Setup: Protectionism That Backfired Spectacularly

Post-WWI, Congress slapped heavy tariffs on imports to “shield” American farms and factories. Sounds reasonable, right? Wrong. Here’s what actually happened:

The Revenge Loop

• France cranked US car tariffs from 45% → 100%
• Spain hit American goods with 40% tariffs
• Germany and Italy retaliated on US wheat

Result? American exports collapsed. Farmers hemorrhaged $300M+ annually, debt exploded, bankruptcy lines stretched for miles.

The Cost Spiral Domestic prices shot up because foreign goods got expensive. Regular people paid more for everything. Meanwhile, Europe’s post-war recovery stalled because they couldn’t afford US goods anymore. The whole system started choking.

The Domino Effect: From Bad to Catastrophic

Then came Smoot-Hawley (1930)—tariffs on steroids. Global trade tanked. Companies folded. Unemployment surged. 1929 crash hit, and boom: Great Depression.

Plot twist: Recovery didn’t come from more tariffs. It came when FDR ditched protectionism with the Reciprocal Trade Agreements Act (1934), and later when WWII ramped up industrial demand. The lesson was baked into GATT (1947) and later the WTO: protectionism is economic self-sabotage.

So Why Does This Matter to Crypto?

If governments double down on trade restrictions (or digital currency controls like taxing USDT/USDC into oblivion), here’s the crypto angle:

Bitcoin as Economic Escape Hatch When traditional policy breaks, people flee to alternatives. Great Depression → gold. Hyperinflation → crypto. If the US tightens the screws on stablecoins or implements draconian monetary controls, expect Bitcoin demand to spike as a censorship-resistant store of value. Price could follow.

Chaos = Volatility Protectionist policies create economic whiplash—some investors pile into crypto as a hedge, others bail fearing regulatory crackdowns. See: China’s 2021 crypto ban sent markets into freefall. Repeat that playbook globally, and we’re looking at serious BTC volatility, both up and down.

The Real Takeaway

Tariffs and trade wars look like strength but work like poison. The 1920s-30s proved that closing your economy doesn’t protect it—it strangles it. Today’s policymakers should know better. Whether it’s trade or monetary policy, extreme restriction triggers extreme consequences. For crypto believers, it’s both a warning and an opportunity: warning on regulatory overreach, opportunity in demand for decentralized alternatives.