https://www.history.com/news/trade-war-great-depression-trump-smoot-hawley
n particular, experts have pointed to the failure of the Smoot-Hawley Tariff Act, passed in June 1930, to protect U.S. industries with tariff increases.
Although this came several months after the stock market crash of 1929, the U.S. hadn’t yet entered “the full onset of the Great Depression,” says Claude Barfield, a resident scholar at the American Enterprise Institute. The thinking among Congress and President Herbert Hoover was that by raising taxes on thousands of imports no matter what country they came from, the act would protect American farmers and secure the nation’s economy. But experts disagreed.
“Economists around the country argued to the Republican Congress that this would only hurt the world economy, and the United States economy,” Barfield says. (Before the political parties realigned in the mid-20th century, the Democrats were the “free trade” party.)
And they were right. Although it did not cause the onset of the Great Depression, it did help extend it. Other countries responded to the United States’ tariffs by putting up their restrictions on international trade, which just made it harder for the United States to pull itself out of its depression.
In effect, the Smoot-Hawley Tariff Act “prolonged [the depression] and possibly deepened it around the world, not just in the United States but for other countries,” he says.
I see you know your free-trade history. I’ve spent my entire life working in a region (Latin America) that for a time rejected the idea of free-trade based on comparative advantage.
And we’re still dealing with the consequences of Import Substitution Industrialization (i.e., we can make all we need right here at home). As you would expect, all manners of protectionism (tariffs, quotas, subsidies, currency manipulation, exchange controls) were fundamental to the policy, and what a disaster it was!
Bewilderingly, these ideas persist.