ANTHONY KILA
Anthony Kila is a Jean Monnet professor of Strategy and Development. He is currently Institute Director at the Commonwealth Institute of Advanced and Professional Studies, CIAPS, Lagos, Nigeria. He is a regular commentator on the BBC and he works with various organisations on International Development projects across Europe, Africa and the USA. He tweets @anthonykila, and can be reached at anthonykila@ciaps.org
A word is trending in 2025, and regardless of your opinion on the American President, Donald Trump, one cannot reasonably dispute that he has reintroduced this lexicon into our everyday vocabulary. The term is “tariff”; however, it is seldom used alone in contemporary times. Instead, it tends to appear in conjunction with other terms. It often manifests in its benign form as a suffix, as in “trade tariff”, or in its more alarming form as a prefix, as in “tariff war”. Allow me to seek the indulgence and permission of logophiles and historians to label the 2025 tariff, in all its shades and forms, as “the Trump Tariffs”.
Setting Trump aside, let us remind ourselves that a tariff is a tax imposed by one country on goods and services imported from another country or more, with three possible aims: to influence the exporting country, protect the importing country’s producers, or raise revenues.
In the case of the Trump tariff, we are dealing with a fundamental aspect of Donald Trump’s political-economic ideology. According to his stated and reiterated vision and intentions, tariffs are necessary to restore America’s trade balance with foreign partners, thereby reducing the disparity between what the US imports from and what it exports to individual countries. He also believes tariffs will enhance US manufacturing and stimulate the domestic economy.
So far, so bad for the American economy, though: As we approach the third week of March 2025, news stories depict an unpatriotic Dow Jones that insists on tumbling down. Financial experts (presumably Marxists) are forecasting a possible recession instead of the promised growth and a downgrade of the American economy. What do they know anyway? Furthermore, it is too early to say who knows how it will end.
Today’s tariff story is, however, one whose ending we already know, and it does not relate to the Trump tariff saga- or does it?
Our story dates back to 1928, a year of presidential electioneering in the United States. That year, Herbert Hoover, a Republican candidate born in Iowa in 1874, pledged to support farmers by raising tariffs on agricultural products. On a personal note, my mother, who is not a trained economist, raised me to avoid saying anything terrible about Herbert Hoover because he shares a first name with my father, who was an economist.
Herbert Hoover won the election and was sworn in as the 31st President of the United States in 1929. His party enjoyed comfortable majorities in the House of Representatives and the Senate, and nothing could stop them now. As promised, once Herbert Hoover became president, he called Congress into a special session to address a troubled farm economy. Hoover’s initial idea was limited to an agricultural tariff to please farmers, but other Republicans reasoned, “Why limit it to only farmers when we can extend the tariffs to and protect all other American sectors?”
Although Hoover originated the concept of tariffs, two legislators —Willis Hawley and Reed Smoot— propelled their implementation, and with that, their names have gained a place in history. Willis Hawley was a congressman from Oregon who chaired the House Ways and Means Committee, while Reed Smoot was a senator from Utah who chaired the Senate Finance Committee. The instrument with which they introduced the tariff was the Smoot-Hawley Tariff Act.
The journey was anything but smooth. Democrats, along with some Republicans, aimed to oppose the Tariff Act or, at the very least, to mitigate it. For fifteen months, they debated and negotiated both inside and outside Parliament. Economists cautioned against the risks posed by the Tariff Act; yet, the hawks triumphed, and the bill was enacted. On 30 May 1930, a petition signed by 1,028 U.S. economists condemning the proposed Smoot-Hawley Tariff Act was presented to President Herbert Hoover, urging him to veto it. The originators and first signatories of that petition included Paul H. Douglas, Professor of Industrial Relations at the University of Chicago; Irving Fisher, Professor of Economics at Yale University; Frank D. Graham, Professor of Economics at Princeton University; Ernest M. Patterson, Professor of Economics at the University of Pennsylvania; Henry R. Seager, Professor of Economics at Columbia University; Frank W. Taussig, Professor of Economics at Harvard University; and Clair Wilcox, Associate Professor of Economics at Swarthmore College.
The petition, among other matters, indicated that: “We are convinced that increased restrictive duties would be [a] mistake. They would operate, in general, to increase the prices which domestic consumers would have to pay. By raising prices they would encourage concerns with higher costs to undertake production, thus compelling the consumer to subsidize waste and inefficiency in industry. At the same time they would force him to pay higher rates of profit to established firms which enjoyed lower production costs. A higher level of duties, such as is contemplated by the Smoot- Hawley bill, would therefore raise the cost of living and injure the great majority of our citizens…”
Ultimately, their efforts proved futile; President Hoover signed the Tariff Act on 17 June 1930. One of the petition’s authors, Paul Douglas, who later became a senator, commented that President Hoover wanted to heed the economists’ advice but could not bring himself to break with his own party’s congressional leadership.
One of the immediate and most direct effects of the Smoot-Hawley Tariff Act was retaliation from other countries. Over 25 nations, including Canada and various European countries, imposed counter-tariffs on U.S. goods and services. This resulted in the collapse of global trade and exacerbated already precarious economic conditions worldwide.
Another effect of the Tariff Act was the decline in U.S. exports. Between 1929 and 1933, U.S. agricultural and industrial exports plummeted by over a staggering 60 percent. Farmers, for whom the tariffs were initiated, suffered considerably because they also benefited from international markets.
Undoubtedly, the situation was dire before the Tariff Act came into effect, but those tariffs exacerbated the crisis, contributing to the economic downturn that persisted throughout the 1930s. The Great Depression deepened as diminished global trade resulted in business failures and job losses.
Some still debate the effects of the Smoot-Hawley Act and continue to assess its true impact, but most agree that the bill serves as a significant example to be cited as a cautionary tale against protectionism during economic downturns. Beyond providing us with an example for use in the classroom and in politics, the Smoot-Hawley Act contributed to the U.S. adopting more free trade policies post-World War II, culminating in the establishment of the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organisation (WTO).
Join me if you can @anthonykila to continue these conversations.
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