Tariff Policy - Lemons and diplomacy



The idea of placing tariffs in the service of diplomacy during the Cold War was so prevalent that it can be applied in the most esoteric of cases, such as lemons. At the second round of GATT in 1949, America and Italy disputed U.S. tariffs on lemons, a key Italian export. But timing was everything. Moscow had initiated a blockade of Berlin to chase out the Western powers. Czechoslovakia had fallen to the Soviets, while the Marshall Plan had been rushed to Western Europeans struggling to recover from the war and against popular socialist parties tied to Stalin. Communists were poised for triumph in China as the Russians exploded an atomic device, shocking the United States. In these dire circumstances, the State Department sided with Italy, warning that without a cut in the U.S. import duty on lemons, the result would be a failing economy, a peasant revolt in Sicily, and Italy's defection from NATO, which would have devastating effects on America's containment policy. California and Arizona lemon growers, however, lobbied the Truman administration against a concession. They noted, and even the State Department agreed, that Italian lemons competed effectively in the U.S. market, and so a tariff decrease was unnecessary. Furthermore, domestic producers accused the diplomats of trying to bribe Italy with a U.S. tariff decrease to remain at the GATT discussions as a show of Western unity against communism. President Harry Truman weighed their complaints alongside foreign policy objectives, and decided the matter on the latter's merits. America could absorb Italian lemons; growers would survive. Even if they were hurt, however, their sacrifice did not match the potential for Italy's economic and political instability, which would only cause diplomatic strife at a time of great tension in the Cold War. Subsuming tariffs under the containment doctrine ruled trade policy for decades thereafter.



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