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Smoot Hawley Tariff

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Smoot Hawley Tariff

Herbert Hoover left office as an unpopular U.S. President. His plans to aid farmers struggling since World War I brought him into office. It would turn out to be a case of "be careful what you wish for." He took actions to protect American industry and agriculture from overproduction by removing foreign competition begot the Smoot-Hawley Tariff. Its effects proved to be highly unpopular, and the Tariff is considered one of the greatest blunders of his presidency. Historians still debate today the significance these measures had on the Great Depression.

A black and white photograph of Reed Smoot and Willis C. Hawley StudySmarter

Smoot and Hawley/Wikimedia Commons

Tariffs in the United States

Tariffs have been a big part of the United States' economic policy since the 1950s. The Republican Party strongly favored protectionism. With this policy, Republicans had won most presidential contests up through Hoover's Day from the Civil War onward. Hoover himself was a Republican. Despite a brief reversal during the administration of Woodrow Wilson, tariffs were already in place when Hoover took office.

Protectionism:

Creating high tariffs to protect domestic industries from foreign competition.

Low Farm Prices

Throughout the 1910s and 1920s, the prices farms could get for their crops were lowering. Many farmers looked to the government for help. The price of agricultural goods was not as impacted by cheap imports as industrial goods. Still, many farmers wanted to see higher tariffs on agriculture, matching the industry's duties. Although Hoover generally promoted ideas of self-reliance, his campaign promised to help farmers with agricultural taxes and the organization of co-ops to maintain crop prices.

Smoot-Hawley Tariff Overview

Shortly after taking office, President Hoover turned towards the issue of Tariffs. The ultimate result would be the Smoot-Hawley Tariff. President Hoover signed the bill on June 17th, 1930. Senator Reed Smoot and House Representative Willis Hawley led the bill's drafting. The signing of this bill would be one of several acts largely viewed as mistakes made by Hoover as the nation suffered during the Great Depression of the 1930s.

A black and white photograph of Senator Reed Smoot explaining the Smoot-Hawley Tariff StudySmarter

Senator Reed Smoot Explains the Tariff Over Radio/Wikimedia Commons

The Development of the Tariff

When raising tariffs was debated in Congress, President Hoover decided to remain out of the Process. Conservative Republicans in favor of protectionism controlled the committees which developed the bill. These were the House Ways and Means Committee which House Representative Willis Hawley chaired, and the Senate Finance Committee presided by Reed Smoot. Progressives in the Republican Party and Democrats tried to stall the bill, causing it to take fifteen months to come together.

The Signing of the Tariff

One thousand economists signed a petition requesting that President Hoover not sign the Smoot-Hawley Tariff Act. However, due to his campaign promise to raise tariffs on agricultural goods, Hoover felt that the bill was necessary. Still, Hoover did consider the bill went too far and referred to it as "vicious, extortionate and obnoxious." He annexed a provision to it to adjust the Act without Congressional approval. His plan had been to lower some of the tariffs after the Act was signed, but high tariffs went into effect anyways.

Besides his campaign promise to raise agricultural tariffs, there was a vital partisan element to Hoover signing the bill. By signing the bill, Hoover firmly aligned himself with the Conservative wing of the Republican Party at the time. Many of Hoover's broader policies and his response to the Great Depression strongly aligned with Conservative Republican views. This angered many progressive Republicans, crossing party lines to support Franklin Delano Roosevelt against Herbert Hoover in the 1932 presidential election.

Smoot-Hawley Tariff, A political cartoon about the Smoot-Hawley Tariff  StudySmarter

Political Cartoon highlighting how Unpopular the Tariff Was/National Archives

The Effects of the Smoot-Hawley Tariff

The Smoot-Hawley team set off a chain of tariffs that negatively impacted world trade. Foreign trade fell to almost half within two years of the Act. The effects of the Tariff on the Great Depression in the United States are debated by historians and economists. Hoover, Smoot, and Hawley would all fail to be re-elected after the tariffs took effect.

International Impacts of the Smoot-Hawley Tariff

The economic protectionism which Conservative Republicans favored led to a collapse in world trade. Before the bill took effect, other nations retaliated by raising their own tariffs. This led to a freeze in international trade as import prices increased significantly. The tariffs were terrible for trade specifically and diplomacy in general.

Impact of the Smoot-Hawley Tariff on the Great Depression

As the bill was being debated in Congress, little was made of the October 1929 stock market crash. The Great Depression began. Foreign investors started to take their money out of the United States stock market. The price of some goods increased, which helped industry but was hard on the massive unemployed population.

Economists and The Smoot Hawley Tariffs' Significance

Some economists believed that fears of incoming tariffs impacted the stock market crash of 1929. Others, such as Milton Friedman, thought that other factors were much more important in causing the market to plummet and the Great Depression. While the actual impact of the tariffs is debated, most agree it was not good for the economy. The arguments center on whether the impact was significant or not.

The economics of consumer prices was complicated at the time. Industrial manufacturing became much more efficient as electricity spread across the United States. The problem was that there weren't enough consumers for all of the new goods. Some of the thinking behind the high tariffs was to discourage foreign competition for American goods. However, America was already exporting more than it was importing.

Smoot-Hawley Era Numbers

From 1929 to 1933, U.S. Trade:

  • Imports decreased from $4.4 billion to $1.5 billion
  • Exports declined from $5.4 billion to $2.1 billion
  • Gross National Product decreased from $103.1 billion to $55.6 billion

End of the Smoot-Hawley Tariff

Many things changed when Franklin Delano Roosevelt beat the unpopular Herbert Hoover in the 1932 election. Roosevelt had campaigned on the larger government of the New Deal. One area in which Roosevelt reduced government intervention was tariffs. In 1934, the Reciprocal Trade Agreements Act was signed by Roosevelt. The Act reduced the high tariffs and encouraged more international cooperation.

Smoot-Hawley Tariff - Key takeaways

  • The Smooth-Hawley Tariffs significantly increased tariffs in 1930.
  • These measures resulted in more tariffs internationally as retaliation.
  • World trade severely contracted.
  • Economists debate if it had a significant impact on Great Depression, but most agree it was not a good policy.

Frequently Asked Questions about Smoot Hawley Tariff

The Smoot-Hawley tariff was a bill that significantly increased tariffs on both industrial and agricultural goods.

No, the Great Depression continued and international trade came to a halt.

International trade halted and the US lost more than half of its imports and exports.

It was believed that American industry and agriculture should be protected from overproduction by removing foreign competition.

The Smoot-Hawley tariff was passed on June 17th, 1930.

Final Smoot Hawley Tariff Quiz

Question

Who did President Hoover initially want to help with tariffs before the Smoot-Hawley Tariff Act was negotiated?

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Answer

Farmers 

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Question

What was an effect of the Smoot-Hawley Tarriff Act?

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Answer

Countries around the world responded with tariffs that cut international trade

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Question

What did Hoover ignore when he signed the Smoot-Hawley Tariff?


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Answer

A petition signed by 1,000 economists 

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Question


Tariffs had long been a part of US economic policy before the Smoot-Hawley Tariff Act

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Answer

True 

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Question

What did the Smoot-Hawley Tariff Act do to tariffs?

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Answer

It raised them on both agricultural and industrial goods

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Question

How did the Smoot-Hawley Tariff Act impact the political careers of Reed Smoot and Willis C. Hawley?


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Answer

Neither were reelected 

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Question

Why did President Hoover sign the Smoot-Hawley Tariff Act?

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Answer

His campaign promise to raise agriculture tariffs and partisan support for Conservative Republicans 

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Question

President Hoover believed that the Smoot-Hawley Tariff Act was a perfect piece of legislation for addressing international trade issues 

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Answer

False 

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Question

How did the Smoot-Hawley Tariff Act change United States international trade?

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Answer

From 1929 to 1933 US Trade:


  • Imports decreased from $4.4 billion to $1.5 billion
  • Exports decreased from $5.4 billion to $2.1 billion
  • Gross National Product decreased from $103.1 billion to $55.6 billion

Show question

Question

How do economists believe the Smoot-Hawley Tariff Act impacted the Great Depression?


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Answer

Some believe that incoming tariffs were a part of the 1929 stock market crash. Others believe that the tariffs had little effect on the Great Depression. 

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Question

When did the Smoot-Hawley Tariffs end?

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Answer

When President Franklin Delano Roosevelt signed the Reciprocal Trade Agreements Act in 1934

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