Question

How important were domestic political institutions in shaping the outcomes of the Tariff on Smoot-Hawley answer in depth.

Answer 1

Smoot-Hawley tariff act was signed into law in 1930. it was landmark bill in US economic history. Many items were subjected to high tariffs rate to control import of goods from across the world. Some economists regard that it was motivated by the depression in USA.

Political institutions played critical role in shaping this bill. President Hoover his presidential campaign had promised to farmers to increase tariffs on agro products. but after coming into power, he increased tariffs on both agro and industrial products alike.

Further, there was sharp rise in productivities across the sectors in USA in 1920s. It increased output significantly, hence controlling inflation was becoming need of hour. But gradually, other countries also retaliated to high tariffs by following same trade policy.