Smoot-Hawley Tariff

Definition

The Smoot-Hawley Tariff was a protective tariff enacted in 1930 that raised duties on hundreds of imports to the United States. It aimed to protect American industry during the Great Depression by making foreign goods more expensive, but it ultimately led to retaliatory tariffs from other countries, worsening the global economic downturn.

5 Must Know Facts For Your Next Test

1. The Smoot-Hawley Tariff raised U.S. tariffs to an average of 60%, making it one of the highest tariffs in U.S. history.
2. Many economists argue that the tariff worsened the Great Depression by reducing international trade and increasing tensions between countries.
3. The legislation was named after Senator Reed Smoot and Representative Willis C. Hawley, who were key proponents of the bill.
4. In response to the Smoot-Hawley Tariff, many countries enacted their own tariffs, leading to a significant decline in global trade volumes.
5. The tariff faced widespread criticism and is often cited as a contributing factor to the prolonged economic stagnation experienced during the Great Depression.

Review Questions

• What were the primary goals of the Smoot-Hawley Tariff, and how did they reflect the economic beliefs of the Hoover administration?
  • The primary goal of the Smoot-Hawley Tariff was to protect American industries from foreign competition by raising tariffs on imported goods. This reflected the Hoover administration's belief in protectionism as a way to stabilize the economy during the Great Depression. However, while aimed at shielding American businesses, it resulted in retaliation from other nations, exacerbating economic challenges both domestically and globally.
• Analyze the immediate effects of the Smoot-Hawley Tariff on U.S. trade relations with other countries during the early 1930s.
  • The immediate effects of the Smoot-Hawley Tariff included a significant drop in international trade as other countries retaliated with their own tariffs. This led to strained diplomatic relations and increased tensions as nations turned inward to protect their own economies. The resulting trade war contributed to further economic decline, illustrating how interconnected economies can be negatively impacted by protectionist measures.
• Evaluate the long-term implications of the Smoot-Hawley Tariff on U.S. economic policy and international relations in subsequent decades.
  • The long-term implications of the Smoot-Hawley Tariff shaped U.S. economic policy by highlighting the dangers of protectionism. It led to a reevaluation of trade policies and an eventual shift towards more liberal trade agreements in later years. Additionally, the tariff's negative impact on international relations prompted future leaders to seek cooperative solutions through institutions like the General Agreement on Tariffs and Trade (GATT), emphasizing global trade as a pathway for economic recovery and peace.

Related terms

Protectionism:

An economic policy that restricts imports through tariffs, quotas, and other regulations to protect domestic industries from foreign competition.

Great Depression:

A severe worldwide economic downturn that began in 1929 and lasted throughout the 1930s, characterized by high unemployment, deflation, and a collapse in international trade.

Retaliatory Tariffs: Tariffs imposed by one country in response to tariffs imposed by another country, often leading to a trade war and further reductions in international trade.