Which of the following was a result of the Smoot-Hawley Tariff?
BLO SAVE
a. It helped to lower food prices.
b. It helped to increase trade.
c. It reduced the supply of food in the United States.
d. Europeans retaliated with their own protective tariffs.
The Correct Answer and Explanation is:
The correct answer is d. Europeans retaliated with their own protective tariffs.
The Smoot-Hawley Tariff, passed in 1930, was a U.S. law that raised tariffs on thousands of imported goods, including agricultural products, manufactured goods, and raw materials. The intent was to protect American industries and workers from foreign competition during the Great Depression by discouraging imports. However, the outcome was quite different from what was intended.
Explanation:
- Impact on trade: Rather than increasing trade, the Smoot-Hawley Tariff significantly reduced it. By imposing higher tariffs, the United States made foreign goods more expensive, which led to a decrease in international demand for American products. Countries that relied on exports to the U.S. also suffered, as their goods became less competitive in the U.S. market due to the high tariffs.
- European retaliation: One of the most significant consequences of the Smoot-Hawley Tariff was the retaliatory tariffs imposed by European countries. In response to the U.S. tariffs, many European nations, including Germany, France, and the United Kingdom, imposed their own tariffs on American goods. This created a trade war, with nations all over the world imposing tariffs on each other’s goods, exacerbating the global economic downturn.
- Economic effects: The retaliation by European nations contributed to a further decline in global trade. As tariffs spread globally, international trade plummeted, and economies worldwide faced deeper recessions. The interconnectedness of global markets meant that protectionist policies, like the Smoot-Hawley Tariff, had far-reaching negative effects, extending the Great Depression and deepening economic suffering.
In conclusion, the Smoot-Hawley Tariff worsened global trade relations, leading to retaliatory tariffs from European countries and a significant reduction in international trade. This policy, rather than helping the U.S. economy, contributed to the global economic decline during the 1930s.