The Smoot-Hawley Tariff Act, formally the Tariff Act of 1930, was the federal law that raised U.S. import duties on roughly 20,000 goods to some of the highest levels in American history, provoked heavy retaliation from trading partners, and is widely credited with deepening the Great Depression.1Office of the Law Revision Counsel. 19 U.S. Code Chapter 4 – Tariff Act of 1930 President Herbert Hoover signed it in June 1930. It takes its name from its chief sponsors, Senator Reed Smoot of Utah and Representative Willis C. Hawley of Oregon. Although its steep rates were dismantled through later trade agreements, much of the Act’s administrative machinery remains codified in Chapter 4 of Title 19 of the U.S. Code and still governs how the United States handles unfair imports today.
Why Congress Passed It
The bill began as farm relief. American farmers had struggled through the 1920s with falling crop prices and growing foreign competition, and Congress originally set out to raise duties on agricultural imports. As the legislation moved through the House Ways and Means Committee and the Senate Finance Committee, industrial lobbyists secured protection for their sectors as well. By the time the bill reached Hoover’s desk, a farm measure had turned into a sweeping overhaul of the entire tariff schedule.
Opposition was loud. More than 1,000 economists signed a petition urging Hoover to veto the bill, warning that trading partners would retaliate and shrink American export markets. Hoover signed anyway, persuaded in part by a “flexible tariff” provision that would let the executive branch adjust harmful rates after the fact.
What the Act Taxed and How Steeply
The legislation touched more than 20,000 imported goods and raised roughly 900 specific tariff rates. Average duties on affected items climbed into the range of 40 to 60 percent of a product’s declared value.
Agricultural imports drew some of the most aggressive protection. Duties rose on livestock, poultry, dairy products, wheat, sugar, hides, and leather.2Federal Reserve Bank of St. Louis. Full Text of Tariff of 1930 (Smoot-Hawley Tariff) The stated goal was to prop up farm incomes by pricing out cheaper imports from South America and other agricultural exporters.
Manufactured goods took similar hits. Higher duties fell on textiles, including wool and cotton fabrics, along with chemical compounds, mineral ores, and heavy machinery. Effective rates on many industrial goods reached as high as 60 percent. The increases targeted European competitors in particular and were meant to steer American buyers toward domestic alternatives.
What Happened to American Trade
The effects came fast. U.S. exports fell from roughly $5.2 billion in 1929 to about $1.7 billion by 1933, a drop of roughly two-thirds. Imports fell by a similar proportion. Combined with foreign retaliation, Smoot-Hawley helped cut total U.S. trade volume by more than half during the Depression years. The tariff was not the sole cause of the Depression, but most economists agree it significantly deepened and prolonged the downturn by strangling international commerce.
How Other Countries Retaliated
Foreign governments moved quickly. Canada imposed tariffs on 16 categories of American products that together accounted for roughly a third of U.S. exports to Canada. Spain’s Wais Tariff of July 1930 piled duties of 100 to 150 percent onto American automobile imports. Italy enacted its own automobile tariff in June 1930, more than doubling the duty on popular American models. Switzerland skipped formal tariffs and instead organized consumer boycotts, with government agencies and banks refusing to buy American-made equipment.
Great Britain, historically a free-trade country, reversed course with the Import Duties Act of 1932, imposing a general 10 percent tariff on most imports. France and other European countries put up their own barriers. Each round of retaliation gave the next country a reason to raise its own rates, and world trade fragmented into a patchwork of isolated markets. American manufacturers lost the overseas buyers they needed for surplus production.
Presidential Power the Act Created
The Act did more than set rates. Section 336, codified at 19 U.S.C. § 1336, created the “flexible tariff” process. The United States Tariff Commission, an independent federal body, was charged with investigating the gap between domestic and foreign production costs for a given good.3Office of the Law Revision Counsel. 19 USC Ch. 4 – Tariff Act of 1930 Based on the Commission’s findings, the President could proclaim new rates designed to close that gap. The authority had a cap: no rate could move up or down by more than 50 percent from the level Congress had originally set. Adjusted rates took effect 30 days after the President’s proclamation.
Section 338, codified at 19 U.S.C. § 1338, gave the President a separate tool aimed at countries that discriminated against U.S. commerce. If the President found that a foreign country was imposing unreasonable charges on American goods or otherwise disadvantaging U.S. trade relative to other countries, he could proclaim additional duties of up to 50 percent on that country’s products, or in extreme cases bar its products from entering the United States entirely.4Office of the Law Revision Counsel. 19 U.S. Code 1338 – Discrimination by Foreign Countries Section 338 has never been invoked, but it remains on the books.
How the Act Was Undone
The damage prompted a rethinking of American trade policy. In 1934, Congress passed the Reciprocal Trade Agreements Act, codified at 19 U.S.C. § 1351, which authorized the President to negotiate bilateral trade agreements and cut Smoot-Hawley rates by up to 50 percent without going back to Congress.5Office of the Law Revision Counsel. 19 U.S. Code 1351 – Foreign Trade Agreements That shift moved rate-setting from statute-by-statute legislation to executive negotiation.6United States Trade Representative. Eighty Years After the Reciprocal Trade Agreements Act
The RTAA opened the way for the General Agreement on Tariffs and Trade in 1947 and, later, the World Trade Organization. For generations, advocates of multilateral trade agreements pointed to Smoot-Hawley as the cautionary example of what unilateral protectionism produces.
What Still Applies Today
The 1930 rate schedules are long gone, but a good deal of the Act’s administrative framework survives. The Trade Act of 1974 renamed the United States Tariff Commission as the United States International Trade Commission (USITC), and the agency’s investigative authority still traces back to the 1930 statute.7Office of the Law Revision Counsel. 19 USC 2231 – Change of Name
The most heavily used surviving provision is Section 337, codified at 19 U.S.C. § 1337, which makes it unlawful to import articles that infringe U.S. patents, copyrights, trademarks, or other intellectual property rights. When the USITC finds a violation, it can issue exclusion orders directing U.S. Customs to block the infringing goods at the border.8U.S. International Trade Commission. Section 337 – Unfair Practices in Import Trade A limited exclusion order targets products from specific companies named in the investigation. A general exclusion order blocks all infringing products regardless of source. The Commission can also issue cease-and-desist orders against the sale of infringing goods already inside the country. Section 337 investigations are now one of the primary legal tools American companies use against counterfeit and patent-infringing imports.
Together with Section 338’s dormant retaliation authority, these provisions mean the Tariff Act of 1930, remembered chiefly for the economic wreckage of its rate increases, still shapes the legal framework the United States uses to police international trade.