Hawley-Smoot Tariff Act

Definition

The Hawley-Smoot Tariff Act, passed in 1930, was a U.S. law that raised tariffs on many imported goods in an effort to protect American industry during the Great Depression. This act significantly increased duties on over 20,000 products and is often cited as a contributing factor to the global economic downturn due to its role in stifling international trade.

5 Must Know Facts For Your Next Test

1. The Hawley-Smoot Tariff Act raised tariffs to the highest levels in U.S. history at that time, averaging about 60% on many imports.
2. In retaliation to the U.S. tariffs, other countries enacted their own tariffs, leading to a decline in global trade and worsening the economic situation worldwide.
3. The act was initially supported by farmers and industrialists who believed it would help protect American jobs, but it ultimately contributed to international economic isolationism.
4. Critics of the act argue that it exacerbated the effects of the Great Depression by reducing international market access for American products.
5. The legislation highlighted the failures of protectionist policies in addressing economic crises and led to a shift towards more liberal trade policies in subsequent years.

Review Questions

• What were the primary motivations behind the passage of the Hawley-Smoot Tariff Act, and how did it reflect the economic climate of the time?
  • The primary motivation behind the Hawley-Smoot Tariff Act was to protect American industries from foreign competition amidst the worsening economic conditions of the Great Depression. Many believed that increasing tariffs would safeguard American jobs and stimulate domestic production. However, this protectionist measure failed to achieve its intended goals and ultimately hindered economic recovery by provoking retaliation from other nations and significantly reducing international trade.
• Analyze the immediate and long-term impacts of the Hawley-Smoot Tariff Act on both the U.S. economy and global trade relations.
  • The immediate impact of the Hawley-Smoot Tariff Act was a sharp decline in international trade as countries retaliated with their own tariffs, which deepened the economic crisis both in the U.S. and around the world. In the long term, it served as a cautionary example against protectionist policies, showing how they can lead to economic isolation and worsen crises. The act prompted a shift in U.S. trade policy towards more open markets in subsequent decades as leaders recognized that cooperation was essential for global economic stability.
• Evaluate how the Hawley-Smoot Tariff Act played a role in shaping economic policies in the United States and abroad during the 1930s and beyond.
  • The Hawley-Smoot Tariff Act had profound implications for economic policy both in the U.S. and internationally throughout the 1930s. It highlighted the pitfalls of protectionism during a global crisis, leading policymakers to reconsider such strategies in favor of free trade agreements post-World War II. The backlash against high tariffs eventually influenced major trade negotiations and institutions aimed at promoting international commerce, such as GATT (General Agreement on Tariffs and Trade), which sought to create a more interconnected global economy to prevent future depressions.

Related terms

Great Depression:

A severe worldwide economic depression that took place during the 1930s, characterized by high unemployment, falling production, and widespread poverty.

Protectionism:

An economic policy aimed at shielding domestic industries from foreign competition by imposing tariffs and other trade barriers.

Tariffs: Taxes imposed by a government on imported goods, used to raise revenue and protect domestic industries from foreign competition.