The Worst Trade War In US History

President Donald Trump's 2025 foray into levying tariffs against various countries has caused the typical conveyor belt of responses from this or that website, pundit, talking head, historian, financial analyst, and so forth. While some members of the public care about the details, others probably Googled, "What's a tariff?" But in all cases, the U.S. population is being forced to confront, even relearn, the ins and outs of an international trade that was on autopilot for quite some time. And to tweak part of a George Orwell quote: "He who knows the past knows the future." So we look to America's past trade wars — if the word "wars" really fits — to learn about the future and the present.

There've been a lot of international trade disputes over the course of the United States' roughly 250-year history. In fact, the country was built on the back of a trade and taxation dispute that reached a head with the ever-famous Boston Tea Party in 1773 (we all know how that turned out). But since those formative American years, the U.S. has gotten locked into trade wars with France and Germany about chickens, Japan about electronics and automobiles, Canada about lumber, Europe about steel, and more. But one trade war stands head and shoulders above the rest if only because of the event to which it was connected: the Great Depression. The United States' Tariff Act of 1930, aka the Smoot-Hawley Tariff Act, saw the country hike tariffs on countries across the globe in an attempt to recover from the economic downturn. The consequences were disastrous.

Even though we all know the term "Great Depression" or have heard vague tales of horrors told by grandparents or great-grandparents, the depression's ground-level reality was something else entirely — and a reason to be grateful for the comforts of the present. Life for families was tough: People lost their homes, took whatever odd jobs they could, lined up at breadlines that ran around the block, had no way to get around besides walking, and more. In this way, the rationale behind the Smoot-Hawley Tariff Act of 1930 did make sense, as the legislation hoped to foster strength amongst American businesses by limiting foreign competition. The fallout, though, was something that lawmakers didn't foresee.

In a nutshell, the Smoot-Hawley Act slapped a 20% increase on foreign goods imported to the U.S. Specifically, the trade measure focused on agricultural and manufacturing sectors, with the intention of discouraging Americans from purchasing foreign goods and encouraging them to buy national products. The Great Depression had only recently gotten underway one year prior in 1929, but its earliest years — 1929 to 1933, roughly — were also its worst. U.S. manufacturing tanked by 47%, and its GDP dropped a full 30%. 

But rather than help the public, the Smoot-Hawley Act accelerated the effects of the Great Depression and made it worse, much like other governmental decisions. In response to the tariffs, other countries basically shrugged and increased their own on imported American goods. This made things harder for U.S. businesses, and in a world of interlocking globalized trade, everyone wound up suffering. 

Even though the Smoot-Hawley Tariff Act initially raised tariffs by 20%, that was just the beginning. In 1929, a group of over 1,000 economists signed a petition asking President Herbert Hoover to veto the legislation. He didn't, citing his own act-given ability to raise or lower the act's tariffs as he saw fit, believing this to be enough to countermand any of the measure's ill effects. Hoover signed the act into law on June 17, 1930, other countries reacted poorly, and the president did the worst thing possible: He doubled down. 

The act started by levying 20% tariffs on all imported goods, but that percentage swiftly rose to a range of 40% to 60%. At this point, it's important to note that the Fordney-McCumber Act of 1922 — seven years before the Great Depression hit — had already raised the average U.S. import tariff to around 40%. On top of this, other U.S. sectors besides manufacturing and farming (20% of Americans were farmers at the time) wanted in on the act's supposed protective powers, which initially covered around 900 goods.

In short time, retaliatory tariffs from other countries flattened U.S. exports from $7 billion in 1929 to $2.5 billion in 1932 — during the Great Depression, mind you. The stock market crashed even harder, 23 global trading partners decried the decision, and the legislators who pushed the bill (Reed Smoot of Utah and Willis Hawley of Oregon) lost their seats. And most critically: The entirety of global trade fell by 65%, which spread America's depression across the world. 

In the end, recovering from the Smoot-Hawley Tariff Act intertwined with recovering from the Great Depression. The effects weren't immediate — United States leadership didn't instantly change direction following the legislation's disastrous ramifications. It took until 1933 under a new president, Franklin Delano Roosevelt, for the situation to begin to improve. After taking office in March 1933, he immediately focused on America's dire economic situation, including its soured international trade relations. Most notably, he enacted a wide-reaching set of domestic economic reforms dubbed the "New Deal." In February of that year, Roosevelt created the Export-Import Bank of the United States — a new government agency — to handle the country's international trade dealings. The Reciprocal Trade Agreements Act of 1934 came shortly after in March.

Stating that "full and permanent domestic recovery depends in part upon a revived and strengthened international trade" (per the U.S. Department of State), Roosevelt's RTAA paved the way for renewed and strengthened individualized trade agreements with 19 countries from 1934 to 1939, which concluded at the end of the Great Depression. By this point — just in time for World War II — the economic downturn had more or less vanished along with the effects of the Smoot-Hawley Tariff Act. The RTAA and its method was such a success that it provided the model for flourishing international trade in the 90-plus years since its creation. This is what it took for the worst trade war in U.S. history to end.