How tariffs and trade wars quickly deepened the Great Depression of the 1930s.
Hoover signed the bill 18 months after deliberations began, and at the early beginnings of the Great Depression. The stock market was in a shamble after crashing and the world economy was sagging. It didn’t take long for America’s biggest trading partners to retaliate.
Canada struck first after Smoot-Hawley raised the tariff on a dozen Canadian eggs from 8 cents to 10 cents. It backfired on the egg producers and started the snowball rolling down the hill on all other goods.
According to American Trade Policy, other countries retaliated, and world trade shrank enormously. By the end of 1934 world trade had plummeted by some 66 percent from the 1929 level. Response to the tariff internationally became a domestic problem that required a reaction from each country.
Figures from the Foundation for Economic Education showed U.S. iron and steel exports decreased 85.5 percent by 1932 due to retaliation by Canada…
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