The Smoot-Hawley Act, officially known as the Tariff Act of 1930, was a U.S. law that raised tariffs (taxes) on over 20,000 imported goods to historically high levels. It was signed into law on June 17, 1930, by President Herbert Hoover. The act was sponsored by Senator Reed Smoot of Utah and Representative Willis C. Hawley of Oregon, both Republicans, with the intention of protecting American farmers and industries from foreign competition during the early stages of the Great Depression.
The main effects of the Smoot-Hawley Act were:
- Increased Tariffs: It raised the average tariff on dutiable imports from about 38% to over 45%, with some rates going much higher. For example, tariffs on agricultural products like butter and wool were significantly increased.
- Global Trade Retaliation: Other countries responded by imposing their own tariffs on U.S. goods, leading to a sharp decline in international trade. Canada, a major U.S. trading partner, retaliated almost immediately, and European nations followed suit.
- Economic Impact: Historians and economists debate its role in worsening the Great Depression. While it didn’t cause the Depression (which began in 1929), it likely deepened it by choking off global trade. U.S. imports dropped by about 40% between 1930 and 1932, and exports fell similarly.
- Political Fallout: The act became a symbol of protectionism gone wrong. It was widely criticized, even at the time—over 1,000 economists signed a petition urging Hoover to veto it. It’s often cited as a lesson in how trade wars can backfire.
The Smoot-Hawley Act was eventually scaled back in the 1930s and 1940s as the U.S. shifted toward freer trade policies under the Reciprocal Trade Agreements Act of 1934. Today, it’s remembered as a cautionary tale about the dangers of excessive protectionism.
Tariffs: 1930 Versus 2025
