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Representative W.C. Hawley, and Senator Reed Smoot shake hands in agreement on new tariff bill

The Hawley-Smoot Tariff (or Smoot-Hawley Tariff Act)^[1] was signed into law on June 17, 1930, and raised U.S. tariffs on over 20,000 imported goods to record levels, and, in the opinion of most economists, worsened the Great Depression. Many countries retaliated, and American exports and imports plunged by more than half.

The act was pioneered by Senator Reed Smoot, a Republican from Utah, and Representative Willis C. Hawley, a Republican from Oregon. President Herbert Hoover had asked Congress for a downward revision in rates, but Congress raised rates instead. While many economists urged a veto, Hoover signed the bill. Hoover had, during the 1928 campaign, pledged to help beleaguered farmers by, among other things, raising tariff levels on agricultural products.

One thousand and twenty-eight economists in the United States, organized by Paul Douglas, Irving Fisher, James TFG Wood, Frank Graham, Ernest Patterson, Henry Seager, Frank Taussig, and Clair Wilcox, and representing the "Who's Who" of the profession, signed a petition asking President Hoover to veto the legislation (New York Times, 5 May 1930)

Retaliation began long before the bill was enacted into law in June 1930. As it passed the House of Representatives in May 1929, boycotts broke out and foreign governments moved to raise rates against United States products, even though rates could be moved up or down in the Senate or by the conference committee. In all, 34 formal protests were lodged with the Department of State from foreign countries.

"Canada's Retailiation was striking. In May 1930, a month before Smoot Hawley was passed, Canada had fired a shot across U.S. bows by establishing new duties on 16 products involving about 30% of all US merchandies exports to Canada". [1]

Economic historians have made different estimates of the impact of this tariff on world trade; however, they all conclude the impact was negative. Using panel data estimates of export and import equations for 17 countries, Jakob B. Madsen (2002) estimated the effects of increasing tariff and nontariff trade barriers on worldwide trade over the period 1929 to 1932. He included not just Hawley-Smoot but the tariff increases in other countries as well. He concluded that real international trade contracted by around 14% because of declining GNP in each country; 8% from increases in tariff rates; 5% because of deflation-induced tariff increases; and an extra 6% because of the imposition of nontariff barriers.

Smoot-Hawley Tariff Act "imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the U.S.," quadrupling previous tariff rates.

Although the tariff act was passed after the stock-market Crash of 1929, many economic historians consider the political discussion leading up to the passing of the act as a factor in causing the crash and/or the recession that began in 1929, and its eventual passage as a factor in deepening the Great Depression.[2] Unemployment was at 9% in 1930 when the Smoot-Hawley tariff was passed, but it jumped to 16% the next year and 25% two years after that.^[2]

As America and European countries increasingly resorted to protectionism as an economic policy, the general amount of international trade radically decreased, causing the world economy to slow.

As a result of the Hawley-Smoot Tariff and other countries' responses to it, the post-World War II world saw a push towards multilateral trading agreements that would prevent a similar situation from unfolding. This led to the Bretton Woods Agreement in 1944 and the General Agreement on Tariffs and Trade in the 1950s.

Abolitionalists of Smoot-Hawley argue that it angered major trading partners who retaliated. Canada for example raised its tariffs and forged closer economic links with the British Commonwealth, and U.S.-Canada trade plunged. France and Britain protested and developed new trade avenues. Germany developed a system of autarky. Imports plunged two-thirds from $4.4 billion (1929) to $1.5 billion (1933), exports fell from $5.4 billion to $2.1 billion, in both cases far more than the 50% fall in Gross Domestic Product. The tremendous drop in foreign trade was a stunning shock to the proponents of Smoot-Hawley and effectively destroyed advocacy of high tariffs in the U.S.

There is not universal agreement as to the impact of the of the tarriff. According to the U.S. Statistical Abstract, the effective tariff rate in 1929 was 13.5% and increased to only 19.8% in 1933. From 1821 through 1900 the United States averaged 29.7% effective tariff rates and peaked in 1830 at 57.3%, dwarfing the Smoot-Hawley rate. In addition, imports in 1929 were only 4.2% of America's Gross National Product (GNP). Smoot-Hawley's impact on the entire U.S. economy was dwarfed in comparison to the monetary policy of the Federal Reserve System.

Recently, it has been argued that Smoot-Hawley was an attempt by the Republican Party to deal with the problem of overcapacity that plagued the U.S. economy in the 1910s and 1920s, which was the result of extremely-high-throughput, continuous-flow mass production and in agriculture the widespread efficiency gains brought on by the use of farm tractors. Rated capacity had increased tremendously; actual output, income and expenditure had not. Under the direction of Senator Reed Smoot of Utah, the party drafted the Fordney-McCumber tariff act in 1921 with an eye to increasing domestic firms' market share. Weakening labor markets in 1927 and 1928 prompted Smoot to propose yet another round of tariff hikes. In his memoirs, Smoot made it clear: "the world is paying for its ruthless destruction of life and property in the World War and for its failure to adjust purchasing power to productive capacity during the industrial revolution of the decade following the war"^[3].

Discussed during the classroom scene in the 1986 movie Ferris Bueller's Day Off. Ben Stein, as the dry high school economics teacher, attempts to draw a parallel between Hawley-Smoot and 1980s-era Reaganomics.

In the discussion leading up to the passage of NAFTA Vice President Al Gore mentioned the tariff as a rejoinder to NAFTA objections voiced by Ross Perot during a debate in 1993 they had on the Larry King show. He gave Perot a framed picture of Smoot and Hawley shaking hands after its passage.

In comedy, mention of the tariff is occasionally made when reference to a notably obscure event from American history is needed, as well as for its silly-sounding name. Humor writer Dave Barry does this repeatedly in his book Dave Barry Slept Here: A Sort of History of the United States.

• International trade
• Protectionism

1. ^ ch. 497, 46 Stat. 590, June 17, 1930, see 19 U.S.C. § 1654
2. ^ Source: U.S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1957 (Washington, D.C., 1960), p.70.
3. ^ Merill, Milton 1990, Reed Smoot: Apostle in Politics, Logan UT: Utah State Press. p. 340.

• Archibald, Robert B., and David H. Feldman, "Investment During the Great Depression: Uncertainty and the Role of the Smoot-Hawley Tariff," Southern Economic Journal, (April 1998), 857-79.
• Beaudreau, Bernard C. 2005 Making Sense of Smoot-Hawley: Tariffs and Technology New York, NY: iUniverse.
• Buchanan, Patrick J. The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to... (1998)
• Crucini, Mario J. and James Kahn. "Tariffs and Aggregate Economic Activity: Lessons from the Great Depression." Journal of Monetary Economics 38, no. 3 (1996): 427–67.
• Crucini, Mario J. "Sources of variation in real tariff rates: The United States 1900 to 1940" American Economic Review 1994. 82: 346–53.
• Eckes, Alfred. Opening America's Market: U.S. Foreign Trade Policy since 1776 (1995)
• Eichengreen, Barry. "The Political Economy of the Smoot-Hawley Tariff." Research in Economic History 12 (1989): 1-43.
• Irwin, Douglas. "The Smoot-Hawley Tariff: A Quantitative Assessment." Review of Economics and Statistics 80, no. 2 (1998): 326–334.
• Kaplan, Edward S. American Trade Policy: 1923-1995 (1996)
• Madsen, Jakob B.; "Trade Barriers and the Collapse of World Trade during the Great Depression" Southern Economic Journal Volume: 67. Issue: 4. 2001.
• Judith McDonald, Anthony Patrick O'Brien, and Colleen Callahan. "Trade Wars: Canada's Reaction to the Smoot-Hawley Tariff." Journal of Economic History 57, no. 4 (1997).
• Merill, Milton 1990, Reed Smoot: Apostle in Politics, Logan UT: Utah State Press.
• O'Brien, Anthony, "Smoot-Hawley Tariff" EH Encyclopedia
• Robert Pastor, Congress and the Politics of United States Foreign Economic Policy, 1929–1976 University of California Press, 1980.
• Schattschneider, E. E. Politics, Pressures and the Tariff (1935). classic study of passage of Hawley-Smoot tariff
• Taussig, F. W. The Tariff History of the United States. 8th edition (1931)
• Temin, Peter. Lessons from the great depression MIT Press 1989
• Tariffs and Trade in U.S. History: An Encyclopedia (2003, 3 vol) Edited by Elaine C. Prange Turney and Cynthia Clark Northrup

• Article on the Smoot-Hawley Tariff from EH.NET's Encyclopedia by economic historian Anthony O'Brien
• Smoot-Hawley Tariff page on the United States Department of State website
• Opinion on the role of the Tariff in the Great Depression from the National Center for Policy Analysis
• Casey and Andy's snooty discussion hour.