Make Me Smart

What we can learn from a past tariff tiff

Feb 12, 2025

Inu Manak, a trade policy expert at the Council on Foreign Relations, explores the lessons from the historic Smoot-Hawley Tariff Act. He discusses the potential ramifications of modern tariffs under Trump's leadership and how protectionist policies could hurt the U.S. economy. Manak warns that these measures may give rise to a self-fulfilling prophecy regarding U.S.-China relations. The conversation also lightens up with surprising ties to the film "Ferris Bueller's Day Off" and local meat sourcing!

20:18

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Inu Manak

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Quick takeaways

The Smoot-Hawley Tariff Act serves as a historical warning that protectionist trade policies can lead to severe economic downturns, as seen in the Great Depression.

Current tariffs under the Trump administration may disproportionately impact the U.S. economy due to the high percentage of trade in GDP and reliance on intermediate goods.

Deep dives

Consequences of Smoot-Hawley Tariffs

The Smoot-Hawley Tariff Act of 1930 significantly impacted the U.S. economy by raising tariffs on various goods in a bid to help alleviate the Great Depression. This resulted in a drastic collapse of trade, with imports plummeting by 41% from 1930 to 1932 and a staggering drop in the Gross National Product by almost 30%. The retaliation from trading partners exacerbated the situation, leading to a further downturn in economic conditions. This historical event serves as a cautionary tale for current trade policies, illustrating how protectionist measures can lead to unintended consequences that may deepen economic crises.

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Intro

2min

Lessons from Smoot-Hawley: Trade and Tariffs Today

13min

Reflections on Trade Wars and Economic Impact

2min

Supporting Local Meat Producers and Joyful Puppy Encounters

2min

The Power of Connection: Dogs, Dating Apps, and Relationships

3min

If President Donald Trump goes through with his plan to levy sweeping tariffs on foreign imports, it wouldn’t be the first time the U.S. has done such a thing. Ever heard of the Smoot-Hawley Tariff Act of 1930? Anyone?

Those tariffs are widely credited with sinking the United States deeper into the Great Depression. And although global trade looks different nowadays, they can teach us a lot about how Trump’s protectionist approach to global trade could play out.

“With the retreat of U.S. leadership and the increasing use of economic coercion, we not only find ourselves in this uncertain world, but one where fears of a U.S. decline vis-a-vis China may become a bit of a self-fulfilling prophecy,” said Inu Manak, a fellow for trade policy at the Council on Foreign Relations.

On the show today, Manak explains how the Smoot-Hawley tariff debacle can shed light on the current moment, why the president has the power to wield tariffs in the first place, and how punishing trading partners could leave the U.S. economy at a disadvantage. Plus, what this fight has to do with the 1980s film “Ferris Bueller’s Day Off” and Roomba vacuum cleaners!

Later, one listener’s call to visit your local butcher. And, dating coach Damona Hoffman, host of the “Dates and Mates” podcast, answers the “Make Me Smart” question just in time for Valentine’s Day.

Here’s everything we talked about today: