Smoot-Hawley Tariff Act Enacts Corporate Protectionism Despite Economist Warnings

President Herbert Hoover signs the Tariff Act of 1930, commonly known as the Smoot-Hawley Tariff Act after its congressional sponsors Senator Reed Smoot (R-UT) and Representative Willis C. Hawley (R-OR), raising U.S. tariffs on over 20,000 imported goods to record levels. Hoover had campaigned in 1928 on increasing tariffs for agricultural products to help struggling farmers, but corporate manufacturing lobbyists exploited the legislative process to attach sweeping new tariffs on industrial goods, transforming limited agricultural relief into comprehensive protectionism that economists warned would deepen the Depression.

The bill’s passage represents a triumph of corporate lobbying over economic expertise. As the legislation moved through Congress, manufacturing interests attached dozens of amendments raising industrial tariffs to new highs, with members trading votes based on industries in their states. In May 1930, a petition signed by 1,028 economists urged President Hoover to veto the legislation, warning it would raise prices on consumers, damage American exports by provoking retaliation, and harm the global economy. Even prominent business leaders opposed the bill—automobile executive Henry Ford spent an evening at the White House trying to convince Hoover to veto it, calling it “an economic stupidity,” while J.P. Morgan’s Chief Executive Thomas W. Lamont said he “almost went down on [his] knees to beg Herbert Hoover to veto the asinine Hawley-Smoot tariff.”

Despite these warnings, Hoover signed the bill on June 17, 1930, yielding to pressure from his Republican Party, his Cabinet (who threatened to resign), and protectionist business interests. The act triggers immediate international retaliation, with 25 countries imposing retaliatory tariffs on American goods within two years, causing U.S. exports to decline from $5.2 billion in 1929 to $1.7 billion in 1933—a 67% collapse. The Smoot-Hawley Tariff Act stands as a case study in how corporate interests can capture the legislative process to advance narrow sectoral gains at the expense of broader economic welfare, transforming policy intended to address one problem (agricultural distress) into legislation that exacerbates a larger crisis (the Great Depression) while ignoring expert consensus.