Word: surtax
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...make his ultimatum for foreign revaluation even clearer, Nixon also slapped the 10% surtax on imports to the U.S. The draftsmen of the President's program candidly admitted that the tax is a bargaining chip to be used in winning revaluation of strong currencies against the dollar to the full extent the U.S. deems necessary (around 12%). The tax is also designed to obtain some other concessions, including bigger subsidies from U.S. allies for the maintenance of G.I.s in NATO countries and the removal of import quotas and other nontariff barriers that hurt sales of U.S. goods abroad...
What does the program mean for U.S. business? There may well be important gains for many firms, especially in the auto industry. The President almost set up Detroit as the proving ground for his plan. The excise-tax cut will undoubtedly boost demand for new cars, and the import surtax (or the currency revaluations that it is designed to bring about) will make U.S. automakers' lowest-priced models competitive with Volkswagen and other big-selling imports for the first time in a decade. In Detroit, Ford President Lee lacocca beamed: "This makes Nixon's trip to China look like child...
Automakers face another problem that is increasingly common in U.S. industry: domestic cars contain a variety of parts produced abroad. Ford officials announced that the price of its '72 Pinto, Capri and Pantera models will be hiked to reflect the surtax on such imported parts as engines and transmissions. But on domestically produced cars, the big three rolled back scheduled increases averaging about 5% on their entire '72 line. The lower prices will hit hardest at financially troubled Chrysler (1970 losses: $7,600,000). Generally, Ford and G.M. officials are hoping to make up for the freeze with rapidly increasing...
...frenetic activity was set off by Nixon's radical moves to sever the dollar from gold and levy a 10% surtax on imports. The former started a worldwide monetary crisis, and the latter threatened to bring forth retaliatory tariffs from all of America's trading partners. With the dollar dethroned as the world's dominant currency, everybody was looking for something that could replace...
Economic Imperialism. In one sense the monetary crisis was clearly the most pressing problem. But the 10% surtax on U.S. imports foreshadowed potentially far more dangerous consequences. Protective tariffs in the early 1930s divided the world into trade blocs that brought international commerce almost to a standstill and gave a major impetus to the growth of economic imperialism in Europe and the Far East. For the past 25 years, the U.S. has championed free trade and economic internationalism. Observed the London Daily Telegraph: "The danger of Mr. Nixon's approach to the dollar's longstanding problems is that...