Nixon Shock

The Nixon Shock ended the fixed exchange rates of the Bretton Woods system and led to the floating currencies that importers deal with today. The surcharge on dutiable imports was meant to pressure trading partners to revalue their currencies, and it was lifted after the Smithsonian Agreement in December 1971. By 1973 major currencies floated freely. For a brand buying from overseas factories, the legacy is currency risk, since the landed cost of the same purchase order can rise or fall with exchange rates. The 1971 surcharge is also an early example of a president using a sudden, broad tariff as an economic lever.

• Landed CostTotal cost to get a product ready to sell
• Purchase OrderPOA buyer's order document to a supplier
• Cost of Goods SoldCOGSDirect cost of the products you sold

• Bretton Woods Conference1944 · 44 nations create the IMF and World Bank
• Marshall Plan1948–1952 · US aid of about $13 billion rebuilds Western Europe
• 1973 Oil Crisis1973–1974 · An Arab oil embargo sends fuel prices soaring

1. Nixon shock (Wikipedia) en.wikipedia.org
2. Unhappy 40th anniversary, Nixon's wage and price controls (Cato Institute) cato.org