What the Democrats should do on trade
Reflecting on the Smoot-Hawley Tariff Act of 1930 six months after its passage, Senator Reed Smoot (R-Utah) declared: “The improvement since passage of the act has been a gradual and a healthy one, and in my opinion is one of the most healthy signs on the economic horizon.” History has not been kind to Smoot’s assessment. Even nearly nine decades after its passage, invoking the phrase Smoot-Hawley is a kind of shorthand for a legislative disaster. With the Trump administration pursuing the most aggressive protectionist agenda since Smoot-Hawley, the incoming Democratic majority in the House should work with pro-free trade Republicans in the House and Senate to avert a similar disaster.
Smoot-Hawley’s contribution to the worsening of the Great Depression was not a surprise. Over a thousand economists signed a letter warning of its disastrous effects. But just knowing how the bill was made ought to have been enough to estimate its impact. Smoot-Hawley was the product of a smorgasbord of legislative horse-trading, with members of Congress fighting for their own districts’ interests with little regard for the overall picture; the result was about nine hundred tariff increases that effectively ignited a trade war. Representative Cordell Hull (D-Tenn.) condemned the bill as having ensured “that the worst type of log-rolling and political pressure of conflicting interests will be continued.”
By March 1933, Hull had become Franklin Roosevelt’s Secretary of State, and he began the arduous task of reversing the economic and diplomatic damage done by Smoot-Hawley. To avoid the parochialism that guided their predecessors, the New Deal Congress sought to change the process by which the country set its trade policy. It did so by delegating authority over trade policy to the executive branch and independent agencies, a process that began with the Reciprocal Trade Act of 1934 and continued nearly through the present.