The Joint Economic Committee of the U.S. Congress:
Consequently, world trade flows collapsed. U.S. goods imports declined from $5.3 billion in 1929 to just $1.7 billion in 1933, while U.S. goods exports fell from $4.4 billon in 1929 to a mere $1.5 billion in 1933.
If these drops were so great and so influential, why doesn't Milton Friedman mention them? First, in comparison to the total economy, foreign trade was then and is today, a small part of the United States economy, (<4% of a 50 Billion economy). Second, the total balance of trade deficit went from (0.9 billion to 0.2 billion). In other words, the United States was losing less money because of Smoot-Hawley. It was in aggregate better off.
Actually, and unsurprisingly, you’re wrong. What a shock.
US exports collapsed from about 6 billion to about 2 billion, ‘29 to ‘32. See: http://www.bea.gov/iTable/iTableHTML.cfm?reqID=9
Table 1.1.3.
That’s not less than 4%, that’s about 7% of a 57 billion economy in ‘33. About 4% of the pre-depression economy of ‘29. All by itself, that’s a nasty recession.
Why do you find it surprising that retaliatory tariffs resulted in a collapse of world trade and economic activity in general?
Especially when piled on top of bad monetary policy after a decade of growth.
Your quoted shrinking of the US trade deficit is also wrong, it went from .4 billion to .1 billion. Which means what? We were buying less stuff. Not good.
In any case, we don’t “lose” anything by any trade deficit, it just means that those durn furriners have more money to buy other stuff. Every dime of which has to be denominated in US dollars.
You know, to buy US assets. Surely you’ve heard of a thing called the accounting identity. It all adds up to zero. Trade deficit plus investment surplus = zero.