Tit-for-Tat Tariffs in the 1930s Trade War

Abstract

This paper details the history of the Tariff Act of 1930, commonly referred to as the Smoot-Hawley Tariffs, and the trade war that followed. Starting with an overview of the influential international trade theories and the ambiguous definition of a trade war, this paper examines the purpose of the Act and its pathway to Congressional approval. Then, it examines the international reactions to the passing of the Act by evaluating the changes in trade patterns and levels of tariff retaliation in Spain, Italy, and Switzerland. It will evaluate the global effects of the trade war and apply the various scholarly definitions of a trade war to the post-Smoot-Hawley trade war. Finally, this paper explores the lessons from Smoot-Hawley and applies them to the ongoing US-China trade war, with a special focus on the proposed trade policies of the incoming Presidential administration.