section_path: Course/The Smoot–Hawley act and the breakdown of international trade
section_name: The Smoot–Hawley act and the breakdown of international trade
paragraph_text: The Smoot–Hawley act and the breakdown of international trade
  
  The Smoot–Hawley Tariff Act was passed in the United States on 17 June 1930, having been proposed the year prior. Ostensibly aimed at protecting the American economy as the Depression began to take root, it backfired enormously and may have even caused the Depression. The consensus view among economists and economic historians (including Keynesians, Monetarists and Austrian economists) is that the passage of the Smoot–Hawley Tariff exacerbated the Great Depression, although there is disagreement as to how much. In the popular view, the Smoot–Hawley Tariff was a leading cause of the depression. In a 1995 survey of American economic historians, two-thirds agreed that the Smoot–Hawley Tariff Act at least worsened the Great Depression. According to the U.S. Senate website, the Smoot–Hawley Tariff Act is among the most catastrophic acts in congressional history.
  
  Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade. Most historians and economists blame the Act for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries. While foreign trade was a small part of overall economic activity in the U.S. and was concentrated in a few businesses like farming, it was a much larger factor in many other countries. The average ad valorem (value based) rate of duties on dutiable imports for 1921–1925 was 25.9% but under the new tariff it jumped to 50% during 1931–1935. In dollar terms, American exports declined over the next four years from about $5.2 billion in 1929 to $1.7 billion in 1933; so, not only did the physical volume of exports fall, but also the prices fell by about 1 ⁄ 3 as written. Hardest hit were farm commodities such as wheat, cotton, tobacco, and lumber.
  
  Governments around the world took various steps into spending less money on foreign goods such as: "imposing tariffs, import quotas, and exchange controls". These restrictions triggered much tension among countries that had large amounts of bilateral trade, causing major export-import reductions during the depression. Not all governments enforced the same measures of protectionism. Some countries raised tariffs drastically and enforced severe restrictions on foreign exchange transactions, while other countries reduced "trade and exchange restrictions only marginally":