Many historians agree that Donald Trump’s trade tariffs policies share similarities with the highly criticized Smoot-Hawley Act from 1930, which they identify as the key factor for prolonging the Great Depression. Historical evidence proves that Trump was correct when he claimed tariffs brought no monetary gains to the United States while hurting its economic health.
President Donald Trump has brought back the historic tariff dispute after political leaders and economic experts began their years-long discussion about this issue. Trump maintained in a media appearance that the Great Depression would not have wreaked such destruction if the United States had continued its high tariff system set during the period before the federal income tax started in 1913. Historians agree that during his recent interview, Trump targeted the well-known anti-free trade Smoot-Hawley Tariff Act of 1930, which historians explain strengthened the Great Depression.
During the early 1930s, two Republican lawmakers, Rep. Willis Hawley from Oregon and Sen. Reed Smoot from Utah, introduced what they considered to be the answer to protecting American industries from foreign market competition. The members of Congress proposed higher tariffs for thousands of imported products to create economic self-sufficiency through the protection of domestic manufacturing industries from low-priced international competition. The nation’s existing economic recession was the reason behind this decision, but it failed to protect the country from the forthcoming widespread devastation.
It renewed interest in this era of American economic history because of Trump’s comments on the Smoot-Hawley Act and his tariffs. The reality, however, could not be further removed from that, contrary to his suggestion that tariffs ever could have prevented the Great Depression. It drew a great deal of heat from President Herbert Hoover’s administration as one of the most short-sighted measures ever enacted. Rather than shielding the United States economy, the act threw foreign nations into a frenzy of retaliatory tariffs, thus further contracting the world economy and exacerbating the economic slump.
Tariff Smoot-Hawley: A Historic Failure
The lasting legacy of the Smoot-Hawley Tariff has to be placed within the economic context of the times. By the time President Hoover was taking office in 1929, the country was already teetering on the brink of going into a recession. Hoover, like Trump, was a self-made businessman who made his money out of being a global mining engineer and was, thus, very much an all-American do-it-yourselfer when it came to the repairman who could put the power of government into action.
Hoover, however, acted against the advice of economists and foreign trading partners when he signed the Smoot-Hawley Act, supposedly to protect American farmers through the imposition of higher tariffs on foreign farm products and manufactured goods coming into the country. The Act imposed tariffs of as much as 49.5% on over 1,500 imported goods.
Smoot-Hawley brought about exactly the opposite effect. The moment the U.S. raised tariffs, the world retaliated by imposing its tariffs on American goods. The subsequent trade war heightened tensions across the world and severely reduced international trade. Export markets for American manufacturers, already weakened by the recession, evaporated. Therefore, foreign markets disappeared for U.S. manufacturers, inducing further cutbacks in shifts and firings.
In 1932, it had disintegrated. Unemployment skyrocketed to 25%, and industrial production plummeted by almost 30%. There was large-scale economic devastation, and it would not be until World War II that the American economy would start to recover, stoked by massive government spending on war production.
Presidential Tariff Policies of Trump Represent a Contemporary Equivalence?
Trump implements high tariffs with the same protectionist rationale Hoover used in the Great Depression era. During campaigning, Trump presented tariffs as essential components of his “America First” doctrine by pointing out that the U.S. eliminated high tariffs during the introduction of the federal income tax in 1913 and therefore initiated economic problems.
According to Trump in his address on his tariff proposal, the Great Depression would never have occurred if the United States had kept the tariff policy from 1929. The history presented by this revisionist group simplifies multiple factors that led to the Great Depression while taking no account of economic influences beyond tariffs.
The United States ceased applying tariff policies during the post-World War II era while adopting free trade promotion, along with establishing international economic organizations, including the World Trade Organization. A shift occurred in economic priorities toward developing an open trading environment, which permitted countries to trade without worrying about trade wars.
Moreover, the experts summarized the reasons for the Great Depression as including the 1929 stock market crash, rumblings, unsound banking policies, agricultural overproduction, and overdebt. Tariffs were not the causes of the Depression, but were some of its results. So they were just a response to an already sick economy.
Case for Free Trade: The Post-World War Consensus
After World War II, the U.S. consolidated its position as the prevailing economic power in the global economy and took on the premier position in advocating free trade. This brief but sweeping period of economic expansion was facilitated by elements such as the birth of multinational corporations, technological revolution, and the global integration of markets. Tariffs, the hallmark of American policy in the 19th century, were by now past events.
Gary Richardson, economics professor from the University of California, Irvine, said, “Tariffs brought industry to the U.S., but we moved away from them because, as the world technology leader, we did not believe we needed them.” The rationale behind the postwar U.S. push for low-tariff regimes was the idea that open markets are in everyone’s interest and would contribute to the indirect advancement of the global economy along with the U.S. economic leadership.
Richardson said tariffs, while having short-term positive influences on some industries, would, over the long haul, break down international collaboration and development. So it was the U.S. that initiated GATT, which later came to be the WTO, to lower trade barriers and promote international cooperation. That plan entailed economic stability and kept out the kind of protectionism that led to the Great Depression.
The World experienced substantial economic effects as a result of Trump’s Tariffs
The main target of Trump’s tariffs against China began a worldwide trade war involving global economic systems. The tariffs enacted by Trump aimed to bring manufacturing jobs home to the U.S. and guard industry, but these actions led China to launch retaliatory tariffs.
The American steel production industry short-term gained from the tariffs, yet the broader economy incurred monetary losses through higher consumer and business expenses. Structural export markets of soybeans suffered severely because other countries responded with trade restrictions based on the new U.S. tariffs. Soybeans constitute a substantial segment of U.S. agricultural output.
The tariffs enacted by Trump did not fulfill his expectation of manufacturing industry restoration in the long run. The slight growth in industrial manufacturing had minimal impact on decreasing the existing trade imbalance and reversing the industrial outsourcing that occurred over several centuries. Most organizations relocated their work to counties with more advantageous inputs.
History Repeats Itself
Protectionism remains harmful to the global economy based on the historical lessons from the Smoot-Hawley Act. Even though protective measures provide short-term benefits for certain businesses, they cause broad economic deterioration through diminished international commerce and deteriorating international diplomatic relations. The complexities of the Great Depression, coupled with the protectionist measures’ contribution to worsening the economic crisis, contradict Trump’s nonscientific reference to the Smoot-Hawley Act.
Historian David Hamilton of the University of Kentucky explained that President Hoover did not use trade as an instrument of war, similar to modern practices. The farmer-saving strategy he implemented led to disastrous consequences. All policymakers need to recognize that tariffs remain ineffective for addressing basic economic challenges in isolation.
Ultimately, the U.S. might have been more successful in the post-World War II period by adopting free trade, which pushed the nation—and the world—into decades of prosperity. Rather than doubling down on past errors, it is important to recall the phrase of Herbert Hoover, who stated, “Economic depression cannot be cured by legislative action or executive pronouncement.” Genuine revival calls for wider economic and international cooperation, not a return to protectionism.
Last Insight:
Trump’s tariffs have sparked debate over their effectiveness, but history offers a simple lesson. Protectionist policies, such as the Smoot-Hawley Act, not only failed to prevent economic downturns but worsened the crisis. The long-term answer is cooperation, not isolation.
