Home > Smoot-Hawley Tariff
The Smoot-Hawley Tariff Act raised US tariffs on over 20,000 dutiable items to record levels, and, in the opinion of many economists, protracted the Great Depression. U.S. President Herbert Hoover signed the act into law on June 17, 1930. The act was championed by Senator Reed Smoot, a Republican from Utah, and Congressman 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 thought he could finesse the law through the U. S. Tariff Commission , and signed the bill.
Although the tariff act was passed after the Stock Market Crash of 1929, many economic historians consider it a factor in deepening the Great Depression. Some economists also view the stock market crash as being a pre-emptive revaluation of stocks based on the news that the tariff act would most likely pass into law. This view is based on the concept that stock markets respond primarily to news about the future.
As nations resorted to protectionismProtectionism is the economic policy of promoting favored domestic industries through the use of high tariffs and other regulations to discourage imports. Historical variants of this policy have included mercantilism, a trade policy aimed at maximizing cu, the general amount of international trade decreased, causing the world economy to slow.
In part as a result of the Smoot-Hawley 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 lead in part to the Bretton Woods Agreement in 1944Events World War II January January 4 The Battle of Monte Cassino begins. January 5 Murder of Danish playwright Kaj Munck January 17 British forces, in Italy, cross the Garigliano River. January 20 The Royal Air Force drops 2,300 tons of bombs on Berlin; and the General Agreement on Tariffs and TradeGeneral Agreement on Tariffs and Trade (usually abbreviated GATT functions as the foundation of the WTO trading system, and remains in force, although the 1995 Agreement contains an updated version of it to replace the original 1947 one. The GATT, as an i (GATT) in the 1950sCenturies: 19th century 20th century 21st century Decades: 1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s Years: 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 Events and trends Technology United States tests the first fusion bomb..
There is still some historical debate as to whether the tariff was harmful or not. A revenueIn business, revenue is the amount of money that a company actually receives from its activities, mostly from sales of products and/or services to customers. To investors, revenue is less important than profit or income which is the amount of money the bu-generating tariff can be beneficial to an economy, if other countries do not respond with tariffs of their own. There has been debate as to whether other countries raised their own tariffs as a result of the Smoot-Hawley Tariff, or if they were simply attempting to accomplish the same goal as the United States. Much of this debate has been centered upon Canada, the United States' largest trading partner, which raised their tariffs substantially in recent years. The cause of the Canadian decision is still disputed, however.
Great Depression
