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. Fundamental Analysis

    Emerging Markets: Analyzing Colombia's GDP

    With a backdrop of armed rebels and drug cartels, the journey for the Colombian economy has been anything but easy.
  2. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  3. Economics

    Is the U.S. Economy Ready for Liftoff?

    The Fed continues to delay normalizing rates, citing inflation concerns and “global economic and financial developments” in explaining its rationale.
  4. Economics

    Oil Is Cheaper Than Bread In Venezuela...The Country Is In Chaos

    Venezuela is floundering, and the story has more to do with just the falling price of oil.
  5. Investing

    China's Top Trading Partners

    A slowdown in China, the largest trading nation in the world, will have significant impacts on major trading partners: the U.S., Hong Kong, and Japan.
  6. Fundamental Analysis

    Emerging Markets: Analyzing Chile's GDP

    Chile has become one of the great economic success stories of Latin America.
  7. Economics

    Explaining Economic Integration

    Economic integration reduces or eliminates trade barriers among nations, and coordinates monetary and fiscal policies.
  8. Economics

    How US Interest Rates Move the World Economy

    Because the US has the world's largest economy, fluctuations in America's interest rates affect much more than domestic growth
  9. Investing News

    Thursday Intel: Yellen on Rates and More Macro Data

    Today should be a packed day as a raft of economic data is expected, and Janet Yellen's speech should keep traders busy.
  10. Economics

    What's the Velocity of Money?

    The velocity of money measures the rate at which money goes from one transaction to another in an economy.
  1. 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 >>
  2. When has the United States run its largest trade deficits?

    In macroeconomics, balance of trade is one of the leading economic metrics that determines the trading relationship of a ... Read Full Answer >>
  3. Which is more important to a nation's economy, the balance of trade or the balance ...

    There is no question the composition of a country's balance of payments is more important than its balance of trade. This ... Read Full Answer >>
  4. What is the difference between cost and freight (CFR) and cost, insurance and freight ...

    The difference between cost and freight (CFR) and cost, insurance and freight (CIF) is essentially the requirement under ... Read Full Answer >>
  5. What is the difference between Cost and Freight (CFR) and Free on Board (FOB)?

    The difference between cost and freight (CFR) and free on board (FOB) lies in who has responsibility for various shipping ... Read Full Answer >>
  6. What are the ethical arguments against government subsidies to companies like Tesla?

    The ethical argument behind government subsidies is that they should be put into place to help industries that will, in turn, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  2. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  3. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
  4. Cost Of Funds

    The interest rate paid by financial institutions for the funds that they deploy in their business. The cost of funds is one ...
  5. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  6. Capitalized Cost

    An expense that is added to the cost basis of a fixed asset on a company's balance sheet. Capitalized Costs are incurred ...
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!