American exports soared in the aftermath of World War I, as Europe depended on the United States for aid in recovery. In 1919 U.S. exports reached a level that would not be exceeded until 1943. There was another change of importance. Most U.S. trade had been financed before the war with sterling acceptances (credits denominated in pounds sterling). During World War I, dollar acceptances came into use. This meant Americans were financing their own trade. A third change was that with Republicans in power in the 1920s, the notion of reduced protectionism floundered (in 1922, the Fordney-McCumber Tariff raised duties, especially to protect new «infant» industries such as chemicals). When, after the 1929 crash, Congress was trying to deal with the downturn, it was easy to blame imports, and the 1930 Smoot-Hawley Tariff was exceptionally high.
In the 1920s, country after country that had abandoned the gold standard during World War I had sought to restore it, but the restoration proved temporary. In 1929–1933 world output declined; countries devalued their currencies to encourage exports, yet world trade plummeted. The 1930 Smoot-Hawley Tariff provoked retaliation: it reduced American imports, but owing to new foreign duties on U.S. products, American exports fell faster. In the 1930s, new barriers to U.S. exports proliferated – not only foreign tariffs but exchange controls, quotas, and a whole range of other impediments to trade. Currencies fluctuated against one another, creating unpredictable conditions. In 1933 the United States devalued the dollar and in 1934 attempted to spur exports with reciprocal trade legislation. But by then the world economy was in such disarray that these efforts did little good. In the second half of 1940 the United States, in response to Japanese militarism, started to restrict U.S. exports to Japan and in August 1941 sharply curtailed the flow of crude oil and gasoline to that country. Many believe that these trade sanctions provoked the Japanese attack on Pearl Harbor.
World War II requirements revived international trade and, specifically, American exports. In the aftermath of that war, America emerged as the world’s economic leader, dedicated to developing a world of greater and freer trade. Its exports exceeded imports, because its goods were highly competitive in world markets. America was strong and physically unimpaired by the war; other industrial countries were in ruins. The United States was committed to lead and to shape a postwar world where trade could serve as a generator of economic growth. The United States was active in the formation of the International Monetary Fund, designed to provide a basis for the return to stable currency rates and to facilitate international payments; international trade could not resume if there were not adequate payment mechanisms. Likewise, the United States participated in the General Agreement on Tariffs and Trade (gatt), to assist countries in eliminating the then ubiquitous obstructions to international commerce. The Marshall Plan assisted both European recovery and American exports to Europe.