U.S. TRADE STRATEGY (1913-1930): THE STRENGTHS AND WEAKNESSES OF THE INTERNATIONAL ECONOMIC STRUCTURE

Abstract

This new situation regarding the transformation of the international economic structure from hegemony to bilateral opportunism has substantially modified the American trade strategy. While the United States had relied on the security provided by Britain’s hegemonic leadership in the past, it was becoming necessary to adapt to the mixed interests of its main trading partner. These new constraints, manifested primarily in domestic political discourse as a fear of foreign retaliation for continued protectionism, led to the accommodative trade strategy adopted in 1913 and followed through the late 1920s. The United States therefore responded with freer trade policy of the Underwood Act as Britain’s position gradually evolved within the international economic structure before the First World War. The war drastically disrupted centuries-old patterns of trade flows: money and investment, and created significant political problems that generated widespread international economic instability. As expected, both Britain and the United States adopted higher but still restricted levels of protection in the wake of the war, and Anglo-American cooperation still proved difficult. The trade strategy of the United States was also affected by the level of international economic instability generated by the fear of retaliation, rooted in the structure of bilateral opportunism, which restrained the levels of American tariffs.