Smoot-Hawley Tariff Act

Smoot-Hawley Tariff Act was a landmark legislation passed by the United States Congress during the presidency of Herbert Hoover, with significant contributions from Reed Smoot and Willis C. Hawley. The act aimed to protect American industry by increasing tariff rates on imported goods, which was supported by Republican leaders like Calvin Coolidge and opposed by Democratic leaders like Franklin D. Roosevelt. The Smoot-Hawley Tariff Act was also influenced by the Fordney-McCumber Tariff and the Tariff Act of 1922, which were signed into law by Warren G. Harding and Calvin Coolidge, respectively.

● Introduction

The Smoot-Hawley Tariff Act was introduced in the United States House of Representatives by Willis C. Hawley and in the United States Senate by Reed Smoot, with the goal of protecting United States industries and farmers from foreign competition, as advocated by Henry Ford and the National Association of Manufacturers. The act was also supported by the American Federation of Labor and its leader, William Green, who believed that higher tariffs would help protect American workers from foreign competition. However, the act was opposed by many economists, including John Maynard Keynes and Paul Samuelson, who argued that it would lead to retaliatory measures from other countries, such as Canada, United Kingdom, and Germany, and exacerbate the Great Depression.

● Background

The Smoot-Hawley Tariff Act was passed during a time of great economic uncertainty, with the Wall Street Crash of 1929 and the subsequent Great Depression having a significant impact on the global economy. The act was also influenced by the Protectionist policies of the Republican Party, which had long advocated for higher tariffs to protect American industry, as seen in the Tariff Act of 1890 and the Payne-Aldrich Tariff Act. The act was supported by many business leaders, including J.P. Morgan and John D. Rockefeller, who believed that higher tariffs would help protect their interests and those of their companies, such as General Motors and Standard Oil. However, the act was opposed by many farmers and ranchers, who relied on exports to other countries, such as Australia and Argentina, and were concerned about the potential impact of retaliatory measures on their livelihoods.

● Provisions and Impact

The Smoot-Hawley Tariff Act increased tariffs on over 20,000 imported goods, including agricultural products like wheat, corn, and cotton, as well as manufactured goods like steel, automobiles, and textiles. The act also established the United States Tariff Commission, which was responsible for investigating and recommending tariff rates, and was influenced by the Federal Trade Commission and the Interstate Commerce Commission. The act had a significant impact on the global economy, leading to retaliatory measures from other countries, such as the Canadian Bennett tariff and the British Ottawa Agreements, which were signed by R.B. Bennett and Ramsay MacDonald, respectively. The act also led to a decline in international trade, which exacerbated the Great Depression and had a significant impact on countries like Germany, France, and Japan.

● Passage and Signing

The Smoot-Hawley Tariff Act was passed by the United States House of Representatives on May 28, 1930, and by the United States Senate on June 13, 1930, with significant support from Republican leaders like James Watson and Charles Curtis. The act was signed into law by Herbert Hoover on June 17, 1930, despite opposition from many economists and business leaders, including Thomas Lamont and Owen D. Young, who were concerned about the potential impact of the act on the global economy. The act was also influenced by the 1928 Republican National Convention and the 1930 United States elections, which were won by Herbert Hoover and the Republican Party, respectively.

● Consequences and Legacy

The Smoot-Hawley Tariff Act had significant consequences for the global economy, leading to a decline in international trade and exacerbating the Great Depression. The act also led to retaliatory measures from other countries, which further reduced international trade and deepened the Great Depression. The act is widely regarded as one of the worst legislative mistakes of the 20th century, and its legacy continues to be felt today, with many economists and historians citing it as an example of the dangers of protectionism and the importance of international trade agreements, such as the General Agreement on Tariffs and Trade and the World Trade Organization. The act also influenced the development of international relations and the foreign policy of countries like the United States, United Kingdom, and Soviet Union, during the Cold War and beyond.

● Repeal and Replacement

The Smoot-Hawley Tariff Act was eventually repealed and replaced by the Reciprocal Tariff Act of 1934, which was signed into law by Franklin D. Roosevelt and established a new system of tariff rates based on reciprocity and multilateralism. The act was also influenced by the London Economic Conference and the World Economic Conference, which were attended by leaders like Neville Chamberlain and Cordell Hull. The Reciprocal Tariff Act marked a significant shift in United States trade policy, away from protectionism and towards free trade and multilateralism, and paved the way for the development of modern international trade agreements, such as the General Agreement on Tariffs and Trade and the North American Free Trade Agreement. The act also influenced the development of international institutions, such as the International Monetary Fund and the World Bank, which were established during the Bretton Woods Conference and played a significant role in shaping the global economy during the post-World War II period. Category:United States federal legislation