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1-025 The Smoot-Hawley Tariff
Vol. 1- No. 25
1995
Lead: Few matters in the study of economics and American history are as boring as tariffs. Intro: A Moment In Time with Dan Roberts. Content: Simply put, a tariff is a tax charged on goods imported into the country. It can be a simple tariff, the government taxes imports to pay its bills, or it can be a protective tariff. Democrats have traditionally believed that high tariffs were bad because 1) they raised the price of overseas goods and 2) damaged the prospects for our exports. If we raised tariffs, other nations would do the same and we couldn't sell our products overseas. Republicans, on the other hand, for most of their history never met a protective tariff they did not like. Allied closely with established business interests, Republicans sought to protect profits and jobs by high taxes on foreign goods. Their enthusiasm continued until President Herbert Hoover signed into law the Smoot-Hawley Tariff of 1930. This was the largest tariff in American history and raised import taxes to an average of forty percent. While the consequences of the Smoot-Hawley Tariff have been a subject of dispute, few would deny that it stimulated a cascade of retaliatory tariffs by foreign governments, which made it very hard for American businessmen and farmers to sell goods overseas. This took the American economy, already staggering after the Stock Market Crash of 1929, and shot it in the knee. The Smoot-Hawley Tariff may not have caused the Great Depression but it made matters much worse. When Democrats returned to power they slowly began to reduce tariff rates and Republicans, with few exceptions, have abandoned protectionism. Today, for the most part, both political parties assert that government tariffs that fatten the profits of poorly run businesses do not make economic sense and cheat the vast majority of Americans of the benefits of affordable goods. The producer of A Moment In Time is Steve Clark. At the University of Richmond, this is Dan Roberts. Copyright 1995 by Educational Broadcast, Inc. Resources Garraty, John A. The Great Depression. New York: Harcourt, Brace, Jovanovich, Publishers, 1986. Kindleberger, Charles P. The World in Depression, 1929-1939. Berkeley: University of California Press, 1986. Temin Peter. Lessons from the Great Depression: The Lionel Robbins Lectures for 1989. Cambridge, Massachusetts: The MIT Press, 1990.
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