Smoot-Hawley, 1930: the tariff that made the Great Depression worse

On 17 June 1930, US President Herbert Hoover signed the Tariff Act of 1930, better known by the names of its two sponsors, Senator Reed Smoot and Representative Willis Hawley. Almost a century later, "Smoot-Hawley" is still the shorthand economists reach for whenever a big country raises tariffs.

Here's what the law did, why its bite grew after it was passed, and what the numbers say about the damage.

A small fix that grew

Hoover first asked Congress for a "limited revision" of tariffs on farm imports, to help struggling American farmers. Fifteen months of bargaining later, the bill covered almost 3,300 items. It raised duties on 890 of them and cut 235.

Opposition was loud. In May 1930, 1,028 economists signed a public statement urging Hoover to veto it, calling higher tariffs "a mistake". He signed anyway.

How high did tariffs go?

The average tariff on dutiable imports rose from about 40% in 1929 to 59.1% in 1932, the second-highest level in US history. But the law itself explains only part of that jump. Economic historian Douglas Irwin estimates the legislation raised the average by about 6 percentage points. Roughly two-thirds of the increase came from something Congress didn't vote on: falling prices.

The hidden multiplier: fixed duties

About two-thirds of dutiable imports paid a specific duty, a fixed amount per unit (cents per kilo, say), not a percentage of the price. As the Depression set in, US import prices fell a cumulative 49% after 1929. The duty stayed the same, so its weight as a share of the price climbed.

So a tariff that looked moderate on paper turned punishing as the world slid into deflation.

The retaliation

Other countries hit back. Canada put new duties on 16 US products, about a third of US exports to Canada, and cut duties on 270 goods from the British Empire instead. Irwin cites one striking example: US egg exports to Canada fell from 9,19,543 dozen to just 13,662 dozen. Spain, Italy, France, Switzerland, Cuba, Australia and others also raised barriers against American goods.

US imports from Europe fell by about 71% between 1929 and 1932, and exports to Europe by about 67% (FIN2DAY calculation). World trade fell by some 66% between 1929 and 1934, according to the US State Department's Office of the Historian.

Did Smoot-Hawley cause the Depression?

No, and most economists today don't claim it did. The Depression had started months earlier, and the main causes were monetary: bank failures and a collapsing money supply. US real GDP fell 25% between 1929 and 1932, and a shrinking economy buys fewer imports with or without tariffs.

But the tariff made a bad situation worse. Irwin estimates that higher tariffs explain about half of the 41% fall in US import volume from 1929 to 1932.

The political cost was clear too. In 1932, voters threw both Smoot and Hawley out of Congress.

The lesson the world drew

In 1934, Congress passed the Reciprocal Trade Agreements Act. It let the president cut tariffs through deals with individual countries, and marked America's turn towards freer trade. That idea of cutting tariffs through negotiated deals later underpinned the post-war trading system, today's WTO.

• Tariffs compoundFixed duties get heavier when prices fall, so the real burden can outgrow what lawmakers intended.
• Retaliation is the normTrading partners rarely absorb a tariff quietly. Exporters on both sides pay.
• Timing mattersRaising barriers in a downturn shrinks trade just when economies most need demand.

Why it's back in the conversation

Tariffs have climbed again in recent years. Yale's Budget Lab put the average US statutory tariff at 11.0% in late August 2026. That is a different measure from the 1932 figure, which covered only goods that paid duty, so the two aren't directly comparable. Still, the direction of travel is why the old law keeps coming up.

For how recent tariff fights played out, see the US–China trade war of 2018–19 and the rollercoaster of US tariffs on India. For why China's export surge matters now, read our explainer on its trade surplus.

Educational content only.