Close this search box.

Table of Contents

Smoot-Hawley Tariff Act


The Smoot-Hawley Tariff Act is a U.S. law enacted in 1930, which implemented protectionist trade policies. Specifically, it increased import tariffs significantly in an attempt to shield American businesses and farmers from foreign competition. However, it is widely considered to have exacerbated the Great Depression due to retaliatory tariffs from other countries.


The phonetics of “Smoot-Hawley Tariff Act” is: /smuːt ˈhɔːli ˈtærɪf ækt/

Key Takeaways

<ol><li>The Smoot-Hawley Tariff Act was passed by the U.S. Congress in 1930 during the Great Depression. It was an attempt to protect American businesses and farmers by raising tariffs on over 20,000 imported goods to record levels.<li>The impact of the act was severe and wide-reaching. It triggered a trade war, with many foreign countries retaliating by imposing their own tariffs on U.S. goods. This resulted in a significant decrease in international trade, which aggravated the economic difficulties of the period.<li>Despite its well-intentioned aim, the tariff act is widely considered to have undermined the global economic recovery following the Great Depression. Economists and historians largely agree that the Smoot-Hawley Tariff Act contributed to the depth and length of the global depression.</ol>


The Smoot-Hawley Tariff Act is a significant piece of legislation in the history of global economics, fundamentally altering the course of international trade. Enacted in 1930 amidst the onset of the Great Depression by the United States, it aimed at protecting U.S. businesses and farmers by significantly raising tariffs on imported goods. Its importance lies primarily in its effects; it not only failed to boost the U.S. economy but triggered an international trade war as countries retaliated with their own tariffs, leading to a dramatic contraction in global trade. The negative implications of this Act set the stage for rethinking trade policies and emphasised the need for cooperation in international trade, leading to the establishment of the modern free trade system under institutions like the World Trade Organization.


The Smoot-Hawley Tariff Act was a U.S. law that was enacted in 1930 with the aim to protect American businesses and farmers by imposing high tariffs on imported goods. During the period following World War I and during the onset of the Great Depression, many American industries were struggling due to increasing international competition. These tariffs were intended to encourage domestic production and shield American enterprises from the effects of globalization and economic turmoil by making foreign goods more expensive and less attractive to consumers.However, the legislation had consequences that extended far beyond its primary purpose. Many countries, in retaliation to the Smoot-Hawley Tariff Act, enacted their own set of high tariffs against American goods. This resulted in a significant reduction in international trade and has been heavily criticized for exacerbating the Great Depression. As such, the use of this law significantly underscores the potential negative global economic impact of protectionist trade policies. While intended to boost local industry, it can lead to trade wars and global economic downturns by disrupting the interdependent relationships in the global economy.


1. The United States Economy during the Great Depression: One of the most significant real-world examples of the Smoot-Hawley Tariff Act was its impact on the U.S. economy during the Great Depression. The Act was initially implemented in 1930, and it resulted in raising tariff rates on over 20,000 imported goods to extremely high rates. This policy damaged U.S. trade relations with other countries, causing them to implement their own tariffs in retaliation. The subsequent trade war further deepened the severity of the Great Depression.2. Impact on the Global Economy: Besides directly affecting the US economy, the Smoot-Hawley Tariff Act had a far-reaching impact on the global economy. Due to the retaliatory tariffs that other countries placed on US goods, international trade saw a dramatic decrease. From 1929 to 1933, world trade decreased by roughly 66%. This not only amplified the Great Depression worldwide, but also fostered animosity and tension between the US and other countries.3. Long-Term Reforms in US Trade Policy: The backlash and economic fallout from the Smoot-Hawley Tariff Act greatly influenced the shaping of future US trade policy. The negative effects of this Act led to a shift in the philosophy towards more free trade policies and agreements (like creation of General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO)). The Reciprocal Trade Agreements Act of 1934 was one such policy change. This act gave the President the power to negotiate tariff reductions with other countries and marked a turn away from the protectionism policy represented by the Smoot-Hawley Tariff Act.

Frequently Asked Questions(FAQ)

What is the Smoot-Hawley Tariff Act?

The Smoot-Hawley Tariff Act is a piece of U.S. legislation passed in 1930 that raised import duties to protect American businesses and farmers by increasing the tax on imported goods.

Who were Smoot and Hawley?

Smoot and Hawley were U.S. politicians, Reed Smoot and Willis C. Hawley. They co-sponsored the Smoot-Hawley Tariff Act.

What was the purpose of the Smoot-Hawley Tariff Act?

The primary purpose of the Smoot-Hawley Tariff Act was to protect U.S. agriculture and industry from foreign competition by raising tariffs on imported goods during the Great Depression era.

What was the impact of the Smoot-Hawley Tariff Act?

The Smoot-Hawley Tariff Act ended up worsening the Great Depression. Many countries retaliated against the high tariffs imposed by the U.S. which led to a decrease in international trade.

What industries were most affected by the Smoot-Hawley Tariff Act?

Virtually all industries were affected by the Smoot-Hawley Tariff Act, but it particularly impacted the agricultural and manufacturing sectors.

How does the Smoot-Hawley Tariff Act relate to current trade policies?

The repercussions of the Smoot-Hawley Tariff Act serve as a lesson about the potential negative effects of high tariffs and protectionism. It remains a reference point today when discussing international trade policies.

Has there been any attempt to repeal the Smoot-Hawley Tariff Act?

The Smoot-Hawley Tariff Act was virtually reduced by 1934 due to the passage of the Reciprocal Trade Agreements Act, which authorized the President to negotiate tariff reductions on a bilateral basis. The Act has also been significantly eroded by subsequent global multilateral trade agreements.

Related Finance Terms

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More