It has been 94 years since the Smoot-Hawley Act in the United States, known for deepening the crisis.

It has been 94 years since the Smoot-Hawley Act in the United States, known for deepening the crisis.

Wall Street, on file | European Press

On this day 94 years ago, on July 7, 1930, the United States enacted the Smoot-Hawley Act, a tariff legislation that dramatically increased taxes on more than 20,000 imported products. The act is remembered as one of the factors that led to the deepening of the Great Depression, and it affected not only the American economy but also the global economy.

The law was named for its main sponsors: Representative Willis C. Hawley of Oregon and Senator Reed Smoot of Utah. Both were Republicans and sought to protect American producers from foreign competition by imposing higher tariffs. The proposed law was debated heavily in Congress, and faced opposition from lawmakers and economists.

Despite the controversy, Congress passed the Smoot-Hawley Act. The House of Representatives passed it in May 1929, and the Senate followed suit in March 1930. President Herbert Hoover, despite warnings from many economists and business leaders, signed the act into law on June 17, 1930, and it went into effect on July 7 of that year. Hoover justified his support on the grounds that it would protect American industry and jobs.

The Smoot-Hawley Act had mixed public support. Some industries, especially those that compete with imported products, supported the measure in the hope that higher tariffs would protect their businesses. However, others, such as farmers who depended on exporting their products, feared trade retaliation from other countries. In addition, many economists at the time warned that the act could lead to a trade war.

The Smoot-Hawley Act raised tariffs on nearly 900 products to unprecedented levels. The average tariff rose from 38% to 60%. This increase was one of the highest in U.S. history and affected a wide range of goods, from agricultural products to manufactured goods.

See also  Moscow stops gas from Europe. No methane gas supply if sanctions continue

The repercussions of the Smoot-Hawley Act were deep and swift. Immediately after its passage, many countries retaliated, imposing their own tariffs on American products. This led to a significant decline in international trade, exacerbating the effects of the Great Depression. World trade contracted, prices fell, and unemployment rose. Many economic historians consider that the act not only failed to achieve its goals of protecting the American economy, but also contributed to deepening and prolonging the Great Depression.

Nations learned valuable lessons from the Smoot-Hawley Act. The key factor was the recognition of the dangers of extreme protectionism and the importance of keeping international trade fluid and open. The experience underscored the need for global economic cooperation and, in subsequent years, led to the creation of institutions such as the General Agreement on Tariffs and Trade (GATT) and, ultimately, the World Trade Organization (WTO), which sought to prevent the recurrence of such harmful policies and to promote free global trade.

Leave a Reply

Your email address will not be published. Required fields are marked *