Smoot-Hawley Tariff Act

The Tariff Act of 1930, a.k.a. the Smoot-Hawley Tariff Act, was a protectionist trade act drawn up by two dudes: Senator Smoot and Representative Hawley.

Unlike the politically targeting tariffs of today, the Smoot-Hawley Tariff Act didn’t discriminate much. It slapped tariffs on over 20,000 goods. That’s a lot of goods. And that was before we even had computers and squatty potties. It wasn’t ideal timing either. The tariffs, along with the retaliatory tariffs by other countries, cut U.S. imports and exports in half during the Great Depression.

You can say all you want about tariffs, but one thing most economists can agree on: the Smoot-Hawley Tariff Act made the Great Depression...even greater. Trade benefits both trading partners, so across-the-board tariffs not only hurt the U.S., but also its trading partners.

Of course, the enactors didn’t know or think this at the time. When times are tough and people are worried about competing with foreign products, protectionism is a natural reaction, like the flight-or-fight reaction. Remember: this wasn’t only on the onset of the Great Depression, but also right after World War II, the world’s biggest, ugliest war ever.

Some did know though. Over one thousand economists asked Prez Hoover to veto the Smoot-Hawley Tariff Act, but...obviously, that didn’t happen. Whoopsies.