With President Donald Trump bent on initiating a trade war by hiking tariffs on imports from major trading partners such as China, Mexico, and Canada, an infamous piece of legislation passed in 1930 is piquing Americans' curiosity. The Smoot-Hawley Tariff Act imposed the highest duties in U.S. history on roughly one-fourth of all imports. It contributed to a steep falloff in global trade and exacerbated the Great Depression. Just when world commerce needed stimulation, many countries erected tariff barriers, often in retaliation for Smoot-Hawley. In this episode, economic historian Phillip Magness of the Independent Institute delves into the reasons why U.S. leaders once believed high tariffs were beneficial and how the executive branch obtained broad power to manipulate tariffs in the decades since.
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