Did the Smoot-Hawley tariff act cause the Great Depression of the 1930′s?
(FAQ: Frequently Asked Questions)
Did the Smoot-Hawley tariff act cause the Great
Depression of the 1930′s?
No, the Smoot-Hawley tariff act of 1930 did not cause the stock
market crash of 1929, or the Great Depression of the 1930′s.
The Free Trade advocates like to say that Smoot-Hawley caused the
depression of the 1930′s. But this is like saying “sliced bread” caused
the Great Depression of the 1930′s.
Just because the Smoot-Hawley tariff act became law in 1930, and
“sliced bread” began national distribution in 1930, does not mean
that the Great Depression of the 1930′s was caused by either one of
Many other countries of the world also enacted tariffs after the US
passed Smoot-Hawley. This may have caused a decrease in
world-wide imports and exports.
Imports and exports did decrease in the US after the passage of the
Smoot-Hawley tariff act of 1930.
But, in 1929, US imports were only a little over 4 percent of US GNP,
and exports were only 5 percent of our GNP.
Imports and exports were nearly equal in 1929, with exports less
than 1 percent of GNP more than imports.
By 1933, both imports and exports had decreased when compared to
If the decrease in exports alone, $3.9 billion were subtracted from the
GNP, the decrease would amount to only a 3.8 percent decrease of
This is far less than the 46 percent that US GNP decreased from 1929
But the decrease in imports must also be added to the GNP numbers.
Imports decreased $3.7 billion, about 3.6 percent, during the same
time period, 1929-1933.
The net effect of the changes to exports and imports from 1929 to
1933, would be only a 0.2 percent decrease from the 1929 GNP.
But GNP decreased 46 percent during this same time period, far more
than the 0.2 percent net decrease in the GNP from changes in imports
Thus, even if Smoot-Hawley did reduce exports and imports from 1929
to 1933, the net effect upon the GNP was very small, a decrease of
only 0.2 percent.
This is less than 1 percent of the total decrease of 46 percent in the
GNP during this same time period.
Smoot-Hawley is one of those myths about the Great Depression that
is used by Free Traders to try to frighten us into sending our factories
to China and other foreign countries.