SMOOT-HAWLEY TARIFF ACT
Reed Smoot and Willis Hawley were members of the U.S. Congress, who introduced a bill known as the Smoot-Hawley Tariff of 1930. This tariff (a tax on foreign imports) came to be synonymous with a major public policy blunder and failure. Smoot-Hawley was signed into law by President Herbert Hoover (1929–1933) after the stock market crash of 1929. Some historians argue that the tariff was so high that it created unprecedented foreign retaliation against the United States. According to this view, Smoot-Hawley helped convert what would have been a normal economic downturn in the U.S. economy into a major worldwide depression, the Great Depression (1929–1939).
The creation of the Smoot-Hawley Tariff presumably did the following: create the highest tariff rates in U.S. history, frighten the stock market, deepen the Great Depression (by reducing the foreign goods available to U.S. consumers), outrage foreign governments into retaliation, and create an open trade war in the midst of economic depression. On the other hand, there are scholars who argue that there is no compelling evidence that this tariff made the Depression worse. Several of them have even suggested that Smoot-Hawley has become a scapegoat for explaining the extended misery of the Depression. But, regardless of its effect in 1930, the Smoot-Hawley Tariff became a metaphor for underestimating the importance of the nation international trade policies.