WI: Smoot-Hawley Tariff Act Never Gets Implemented?

Zyobot

Zyobot

Though the Great Depression would brutalize the 1930s world, the addition of the Smoot-Hawley Tariff Act likely worsened the ensemble. Passed by the United States Congress on June 17, 1930, it slapped high import duties on foreign products in the midst of a severe economic crisis.

Though it sought to protect American workers and businesses, the bill invited retaliation from other nations as they passed tariffs of their own. Banks failed and international trade took a nosedive, leaving the globe in financial catastrophe.

Had the Smoot-Hawley Tariff Act never been implemented, how would the Great Depression, as well as history as a whole, have played out differently?
 

Colonel Grubb

The British Empire is still going to implement Imperial Preference policies regardless of the US actions.

There is likely to be some form sort of tariff reform in the US, especially in the agricultural sector. There is also likely to be a series of smaller acts designed to protect different sectors of the economy (or electorates) as the depression rolls on.

There’s also significant debate about how much harm the Act actually caused compared to the wider situation and root causes of the economic crisis.
 

kernals12

Banned
I think Smoot Hawley is probably overrated in its impact.
FIGURE+9-3+U.S.+Average+Tariff+Rates+on+Dutiable+Imports%2C+1900-2000..jpg

Note the huge increase in tariffs in 1920, even bigger than the one 10 years later. This did not cause a depression (despite what the revisionists say, 1920 was a minor recession).
 
Zyobot

Zyobot

kernals12 said:
I think Smoot Hawley is probably overrated in its impact.
FIGURE+9-3+U.S.+Average+Tariff+Rates+on+Dutiable+Imports%2C+1900-2000..jpg

Note the huge increase in tariffs in 1920, even bigger than the one 10 years later. This did not cause a depression (despite what the revisionists say, 1920 was a minor recession).
Click to expand...

Okay, that's interesting to see. Thank you for putting up that graph, where'd it come from, if I may ask?
 

GeographyDude

Gone Fishin'
kernals12 said:
average-tariff-rate-1821-2016.gif

This is actually a better chart since it includes tariff revenues as a percent of all imports, not just dutiable ones.
Click to expand...
I see a spike at around 1931 or ‘32. It sure as hell didn’t help matters!

(the blue graph of total imports has a smaller and softer upswing, but an upswing none the less)
 

kernals12

Banned
Smoot Hawley is usually discussed in terms of triggering a trade war as other countries retaliated, but I think it should be discussed in terms of being a massive tax hike on American consumers.
 
Athelstane

Athelstane

David T said:
Two things that are true about Smoot-Hawley:

(1) It wasn't a good idea.

(2) It didn't cause the Great Depression and probably didn't even deepen it that much.
See my posts at https://www.alternatehistory.com/fo...-act-no-great-depression.324772/#post-9529921 and

https://www.alternatehistory.com/fo...-a-multi-term-president.348959/#post-10976875
Click to expand...

Wanniski has come across as more ideologue than economist to me on this point - it's hard to disagree that he considerably overstated the impact of Smoot-Hawley in deepening the depression. But mainly that's because, as you said earlier, U.S. tariffs were already pretty damned high.

Nonetheless, it was a bad idea, and it made things worse, not better; and of course, politically, it helped deepen the isolationism which made international efforts to overcome the Depression or, well, stop Hitler more or less impossible.
 
Maeglin

Maeglin

The most notable effect of Smoot-Hawley, I'd argue, wasn't really economic, but rather political. From its inception until the 1930s, the Republicans were the party of high tariffs. The Depression killed that off.

As for the wider Depression itself, you can blame monetary policy (especially the Gold Standard), austerity, and a weak banking system first.
 

GeographyDude

Gone Fishin'
kernals12 said:
average-tariff-rate-1821-2016.gif

This is actually a better chart since it includes tariff revenues as a percent of all imports, not just dutiable ones.
Click to expand...
As far as the brown graph of dutiable imports, the average tariff in the early 1930s was just shy of 60%.

As far as the more significant blue graph of total imports, the early 1930s average tariff was 20%. This was the same as 1910, and it was even higher before that.
 
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kernals12

Banned
DominusNovus said:
The degree of change certainly matters, but the total rate is, in my opinion, more important. You pay the rate, not the change in the rate, after all.
Click to expand...
Changes in taxes only have temporary impacts, after a period of time, everything settles back to equilibrium
 

Dunning Kruger

DominusNovus said:
The degree of change certainly matters, but the total rate is, in my opinion, more important. You pay the rate, not the change in the rate, after all.
Click to expand...

Economics is always (almost) on the margin. The change in what you pay for one rate is also what you dont pay or save for something you previously were.
 

Dunning Kruger

I'd like to see a comparison of trade between 1929-1931 and 2007-2009. Global trade fell off a cliff during the GFC due entirely to change credit availability and a fall off in global demand. It might provide a loose counterfactual to the Smoot-Hawley global trade thesis that has long existed.
 

kernals12

Banned
Dunning Kruger said:
Economics is always (almost) on the margin. The change in what you pay for one rate is also what you dont pay or save for something you previously were.
Click to expand...
If you raise tariffs, it means the government is saving more or is able to spend more. Also, if you look at the Blue line, you see tariffs were much higher in 1900 than in 1933.
 
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