Smoot-Hawley Tariff Act. Worked out great minus that small depression thing.
Hang with us grazzhoppa and you will be enlightened over the next 4 years.
Smoot-Hawley Was Signed Into Law on June 17, 1930, After the Great Depression Began
Since the Smoot-Hawley Tariff Act was signed after the onset of the Great Depression, it could not have caused the economic downturn. At most, critics claim it worsened the Depression—yet this claim is unsubstantiated.
Impact on Trade After Smoot-Hawley
U.S. imports dropped from $5.3 billion in 1929 (4.2% of GDP) to $1.7 billion in 1933, while exports declined from $4.4 billion (5% of GDP) to $1.5 billion in the same period. However, foreign trade represented only a small fraction of the U.S. economy during 1929–1933. Notably, the U.S. trade deficit actually improved, shrinking from $900 million to $200 million. In other words, the U.S. was losing less money after Smoot-Hawley. It seems unreasonable to argue that a policy affecting such a small part of the economy could have caused or significantly worsened the Great Depression.
Tariff Rates Under Smoot-Hawley
The highest "dutiable tariff rate" reached under Smoot-Hawley was 59.1% in 1932, slightly below the 61.7% rate of 1830. Yet by 1933, 63% of imports were not taxed at all, a fact not reflected in the “dutiable tariff rate.” The overall “free and dutiable rate” peaked at 19.8% in 1933, still lower than the average 29.7% rate from 1821 to 1900—a period of significant economic growth.
By 1937, the overall tariff rate dropped to 15.6%, but this did not prevent the economic downturn of 1937–1938, further disproving any link between tariffs and economic decline.
Conclusion
Exports made up less than 5% of the U.S. economy in the early 1930s, and the portion of imports impacted by Smoot-Hawley was even smaller. Given that the U.S. had sustained higher average tariffs between 1821 and 1900—during times of strong economic growth—it’s clear that Smoot-Hawley did not cause or worsen the Great Depression. Furthermore, lowering tariffs in 1937 had no measurable effect on the economy.
Smoot-Hawley was neither the cause nor a significant contributor to the Great Depression.
End of story.