Smoot-Hawley and Godwin's Law

The Smoot-Hawley Act of 1930, of Ferris Beuller fame, seems to be about the only point of reference that most people have on the newly and unexpectedly hot topic of tariffs. (Future readers, Donald Trump just proposed a 25% tax on foreign steel.) Obviously, you can't look at the date of the Act and not connect it to the Great Depression, the greatest economic disaster in (barely) living memory.



The thing is, Smoot-Hawley is linked to the Depression chronologically more than anything. It's accurate to say that it did nothing to solve the economic crisis, and even to say that it contributed to its prolonging. Even so, tariffs were pretty much the norm before the 1930s and well into the 1940s.

Even if we cede that tariffs and subsequent trade wars were the proximate cause of the Great Depression (they weren't), the chart shows that Smoot-Hawley was more-or-less a last hurrah of a prior-to economic norm. They shocked economies all over the world by imposing a 50% tax on everything. There's nothing remotely like it on the table today.

Still, because of its historical link to the worst economic disaster in modern times, Smoot-Hawley has come to not just represent tariffs at their worst, but to frame tariffs as the worst. A strong parallel can be made between nationalism and Nazis, which is also mightily prescient these days. Because Nazism was essentially the worst possible display of nationalism, the whole concept of nationalism—even patriotism—went down the tubes with it.

To that end, I declare that comparisons of trade proposals to Smoot-Hawley, unless some strong case can be made, to be the economic equivalent to Godwin's Law.