The Smoot–Hawley Tariff Act of 1930 sharply raised U.S. tariffs during an already deteriorating economy, contributing to a collapse in world trade and worsening the global downturn, though it was not the sole or primary cause of the Great Depression. Today it functions mainly as a cautionary symbol in economic debates, but some of its authority—especially Section 338—remains on the books and is occasionally referenced when discussing or designing tariff tools under President Trump’s protectionist agenda.wita+5
The Smoot–Hawley Tariff Act was signed into law by President Herbert Hoover on June 17, 1930, at the urging of Senator Reed Smoot and Representative Willis Hawley, both Republicans. It was framed as emergency protection for American farmers and manufacturers facing falling prices and rising imports during the late‑1920s downturn.corporatefinanceinstitute+2
The law raised U.S. tariff rates on thousands of imported goods, lifting the average tariff roughly 20 percentage points and pushing the overall ad‑valorem equivalent rate to around 20 percent or higher. Even before enactment, more than 1,000 economists publicly warned Hoover that the bill would raise the cost of living, provoke retaliation, and damage both exports and foreign relations, warnings that proved prescient.nber+2
Smoot–Hawley triggered retaliatory tariffs by many U.S. trading partners, helping to drive a dramatic contraction in global trade. U.S. exports fell from about 7 billion dollars in 1929 to roughly 2.5 billion in 1932, while international trade volumes declined by roughly two‑thirds, heavily damaging agriculture and export‑oriented sectors.criticaldebateshsgj.scholasticahq+1
Most economic historians now judge that the act worsened and prolonged the Depression but did not cause it, since the initial downturn and stock market crash preceded the law and monetary contraction and banking failures played a larger direct role. Quantitative work suggests the structure of Smoot–Hawley tariffs reduced U.S. total factor productivity relative to free trade by around 1–2 percent, with wider misallocation costs when interacting with deflation.wita+1
Critics emphasize several core shortcomings:
Protectionist intent over system stability: The act aimed to shield specific industries and farmers without regard to systemic global repercussions, underestimating how retaliation would undermine exporters and financial stability.northerntrust+2
Political capture and logrolling: Congressional bargaining led to highly uneven, sector‑specific tariffs, creating distortions across industries and amplifying misallocation of resources.nber+1
Misdiagnosis of the problem: Policymakers treated the crisis largely as a problem of foreign competition and low wages abroad, rather than focusing on credit collapse, deflation, and domestic demand, so the policy failed on its own terms to restore farm and industrial prosperity.criticaldebateshsgj.scholasticahq+1
As a result, Smoot–Hawley has become a standard warning in economics against aggressive protectionism during downturns, often cited as an example of how trade barriers can deepen a crisis and undermine confidence in government policy.northerntrust+1
The Tariff Act of 1930 remains a foundational trade statute; while most of its specific rates have long been superseded by later laws and trade agreements, some legal provisions endure. Section 338 of the act authorizes the president to impose tariffs up to 50 percent on countries deemed to be “discriminating” against U.S. commerce, anticipating later authority such as Section 301 of the Trade Act of 1974.cato+2
In practice, post‑World War II U.S. trade policy moved toward liberalization under GATT and the WTO, and Smoot–Hawley became more a historical symbol than an operational template. Yet the lingering statutory powers, including Section 338, can still be invoked as a legal fallback in debates over possible punitive tariffs.namm+3
Under President Trump, the United States has pursued a markedly more protectionist trade stance, relying primarily on newer statutes rather than directly re‑enacting Smoot–Hawley. The first Trump administration imposed broad tariffs on Chinese imports using Section 301 (in response to alleged unfair trade practices) and additional duties on steel, aluminum and other products using Section 232 (national security).cnbc+2
Analysts estimate that Trump’s latest announced tariff measures push the effective U.S. tariff rate above 20 percent, exceeding the average level reached under Smoot–Hawley and making it the highest in over a century. In speeches, Trump has explicitly referenced Smoot–Hawley, arguing that earlier high tariffs were not the problem and that the real mistake was subsequent liberalization, effectively inverting the mainstream lesson economists draw from the 1930s.cnbc+1
Although rarely used in recent decades, Section 338 of the 1930 act is again mentioned as one option if other tariff authorities are constrained by courts, since it allows up to 50 percent tariffs against countries judged to discriminate against U.S. commerce. In this way, the Smoot–Hawley framework survives not as a wholesale policy model but as a legal backstop and a powerful rhetorical reference point in contemporary tariff politics under President Trump.cato+3