On June 17, 1930, U.S. President Herbert Hoover signs into law the Smoot-Hawley Tariff Act. The Act was enacted to protect domestic industry. However its inception led to world-wide retaliation and the worsening of the Great Depression.

Following the stock market crash of 1929 and the onset of the Great Depression, Congress debated the merits of The Act. The Smoot-Hawley Tariff Act outlined the immediate raising of U.S. tariffs on over 20,000 imported goods. Believing that raising tariffs on imported goods would aid the American economy and its workers, The Act was signed into law.

From its introduction, The Act faced many opponents. Even President Hoover himself did not fully support its intentions. Many petitions were signed and protests held in opposition to The Act - its retractors even cited that an increase on tariffs would do more harm to the American and global economies than good. This led to many of America's largest trading partners to impose similar sanctions on U.S. exports.

Initially, The Act appeared to be a success. Construction, payrolls and industrial production all increased in the months following its passing. However, by 1934 it was clear that its implications were not what law makers had hoped. U.S. imports and exports both fell sharply, and overall global trade decreased by an estimated 65%.

Today, it is widely agreed upon that the signing of the Hawley-Smoot Tariff Act into law was in fact a mistake. It led to greater global trade restrictions and added to the impacts of the Great Depression. (To learn more, read What Caused The Great Depression?.)

Related Articles
  1. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  2. Economics

    How Warren Buffet Made Berkshire Hathaway A Winner

    Berkshire Fine Spinning Associated and Hathaway Manufacturing Company merged in 1955 to form Berkshire Hathaway.
  3. Investing News

    Tufts Economists: TPP Will Reduce U.S. GDP

    According to economists at Tufts University, the TPP agreement will destroy half a million jobs in the U.S. by 2025.
  4. Forex

    The Consumer Price Index

    Find out how this economic measure can help you make key financial decisions.
  5. Economics

    Understanding the History of Money

    Money has been a part of human history for at least 3,000 years, evolving from bartering to banknotes.
  6. Economics

    How Interest Rates Affect The U.S. Markets

    When indicators rise more than 3% a year, the Fed raises the federal funds rate to keep inflation under control.
  7. Investing News

    Global Headwinds Hit the 6 Biggest Economies

    As of Friday, initial estimates for fourth-quarter and full-year 2015 growth in gross domestic product (GDP) are available for five of the world's six largest national economies, and for the ...
  8. Economics

    Three Reasons 2016 Could Be A Better Year for the Global Economy

    The diminishing commodities market and China's slowing growth hurt a lot of companies and economies worldwide. However, there is a chance that much of the shaking out has already occurred.
  9. Fundamental Analysis

    South Korea - King of Exports

    Read about one the most important and successful exporting countries in the world, and learn more about the types of products it exports.
  10. Economics

    The Ripple Effect: Interest Rates and the Stock Market

    Investors should observe the Federal Reserve’s funds rate, which is the cost banks pay to borrow from Federal Reserve banks.
RELATED FAQS
  1. What is comparative advantage?

    Comparative advantage is an economic law that demonstrates the ways in which protectionism (mercantilism, at the time it ... Read Full Answer >>
  2. How does the Wall Street Journal prime rate forecast work?

    The prime rate forecast is also known as the consensus prime rate, or the average prime rate defined by the Wall Street Journal ... Read Full Answer >>
  3. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
  4. How do you make working capital adjustments in transfer pricing?

    Transfer pricing refers to prices that a multinational company or group charges a second party operating in a different tax ... Read Full Answer >>
  5. Marginal propensity to Consume (MPC) Vs. Save (MPS)

    Historically, because people in the United States have shown a higher propensity to consume, this is likely the more important ... Read Full Answer >>
  6. When do I need a letter of credit?

    A letter of credit, sometimes referred to as a documentary credit, acts as a promissory note from a financial institution, ... Read Full Answer >>
Hot Definitions
  1. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  2. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  3. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  4. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  5. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center