Meet The Tariff Men—-Donald Smoot Hawley Trump

We can deduce that in a sound-money regime, that is to say one where payments are accepted in gold or fully-backed gold substitutes, trade imbalances can only be minor and temporary, because imports have to be paid for with inflexible real money, earned so it can be subsequently spent. Money and credit cannot be produced out of thin air to pay for imports. If a deficit on trade does arise, gold flows out and consequently domestic prices for goods will fall. Communities with higher prices will tend to buy from communities with the lower prices, and manufacturers will tend to sell to communities with higher prices.