What to know about Smoot-Hawley tariffs and what does your legacy for Donald Trump mean

President Donald Trump announced expansive tariffs during a Rosas garden ceremony on Wednesday, fulfilling his promise of the campaign and his first months in office.

Republican support promising previously unmatched tariffs as a means to protect US companies and hamstrings is not new.

While the description now evokes Trump, it also applies to Herbert Hoover, who led the country almost a century ago during the beginning of the great depression.

A few months after the value market accident, Hoover signed the Smoot-Hawley tariffs law, a 1930 measure that increased tariffs for a wide strip of imported goods. In response, several countries imposed retaliation rates and trade collapsed. Many economists see the measure as a factor that exacerbated the economic recession of the nation.

“A whole generation of Republicans and Democrats after World War II was very conditioned against the tariff walks due to the experience of the 1930s. We now have a new generation of leaders who are much more willing to achieve the trigger for the highest tariffs,” Douglas Irwin, economy professor at Dartmouth College and author of “Veddling Protticsionism: Smotley-Hawley and the great depression, “he told ABC News.

This is what you should know about the act of Smoot-Hawley rates, its economic impact and what its legacy for tariffs announced by Trump means, according to experts.

What is the Smoot-Hawley rate act?

The Smoot-Hawley rate act came at a time of economic crisis.

As the stock market staggered and financial panic seized, Congress negotiated a set of rates increases that initially aimed to protect US farmers from foreign competition, but finally extended to a wide range of goods manufactured.

The measure is named after its key supporters in Congress: the Republican Senator Reed Smoot of Utah and Republican representative Willis Hawley of Oregon. He went to the Senate through a narrow margin from 44 to 42, and sailed through the House of Representatives for a vote of 264 to 147. Hoover signed Smoot-Hawley in June in June 1930.

For products that already face rates, the law, on average, increased the import tax of 40% to almost 60%, which causes an increase of approximately 20 percentage points, Kris Mitchener, professor of economy at the University of Santa Clara who studies Smoot-Hawley, told ABC News. It also significantly extended the number of goods subject to a rate, he added.

“It culminated in a more or less complete rewriting of the tariff calendar,” Mitchener said, referring to the nation’s tariff code.

What happened after Smoot-Hawley entered into force, and caused the great depression?

The Smoot-Hawley tariffs triggered an almost injustained commercial war, in which several foreign nations responded to tariffs by slapping US imports with their own taxes.

For example, Canada placed tariffs on 16 products that represented approximately one third of US exports, according to a Working role In Mitchener co -authorship in 2021. France and Spain slapped taxes on imported US cars, an important American industry.

“United States business partners responded by pointing to US exports,” Mitchener said. “The most important decreases were in the products that were attacked.”

As a result, commercial partners suffered a reduced production, but also the United States, Michener said.

The deceleration of trade weakened the economy and exacerbated the economic recession of the nation, experts said. However, the great depression had been strengthened before the effects of Smoot-Hawley, and added a cause of the crisis, they added.

“Smoot-Hawley hit the United States economy at a vulnerable moment,” Irwin said.

What could mean Smoot-Hawley for Trump’s tariff announcement?

Smoot-Hawley threw a shadow on the rates policy for decades, Irwin said. “He gave tariffs a bad name,” he added.

For decades, prominent members of both main parties focused on the risks raised by tariffs, occasionally citing Smoot-Hawley, Irwin said.

“The Smoot-Hawley rate lit an international commercial war and helped sink our country into the great depression,” said President Ronald Reagan during a radio speech in 1986.

The measure also played a key role in the change of the tariff authority of Congress towards the Executive Power, since legislators sought a quick way to go back to rates, experts said.

In 1934, the Law on Reciprocal Tariffs gave the President the power to increase or reduce tariff levels by up to 50%. A series of subsequent laws helped change the additional tariff authority to the President.

“Now, Congress does not have much to establish tariffs,” Irwin said.

In the campaign, Trump said he could promulgate tariffs without the support of Congress. It is largely precise in its description of the wide latitude enjoyed by the President by establishing and implementing some rates, experts previously said to ABC News.

“Trump is using delegated powers to approve tariffs,” Irwin said. “That is completing the Smoot-Hawley circle in a certain sense.”