Fact Check: Tariffs caused the Great Depression

Did Tariffs Cause the Great Depression?

The claim that "tariffs caused the Great Depression" primarily refers to the Smoot-Hawley Tariff Act of 1930, which raised import duties on numerous goods. This legislation is often cited as a significant factor in the economic downturn that began in 1929 and lasted through the 1930s. Proponents of this view argue that the tariffs led to retaliatory measures from other countries, exacerbating the global economic crisis. However, the relationship between tariffs and the Great Depression is complex and remains a subject of debate among economists and historians.

What We Know

Smoot-Hawley Tariff Act: The Smoot-Hawley Tariff Act raised tariffs on over 20,000 imported goods, with average tariff rates increasing by about 20% 2 4. This legislation was intended to protect American industries but resulted in significant retaliation from trading partners, which many argue worsened the economic situation 7.
Economic Impact: Various studies and historical analyses suggest that the Smoot-Hawley Tariff contributed to the deepening of the Great Depression. For example, one source states that it "prolonged [the depression] and possibly deepened it around the world" 7. However, it is also noted that while tariffs played a role, they were not the sole cause of the Great Depression, which was influenced by a myriad of factors including stock market speculation, banking failures, and a decline in consumer spending 9.
Contemporary Perspectives: In modern discussions, some political figures, including former President Donald Trump, have suggested that high tariffs might have prevented the Great Depression from being as severe, indicating a belief in protective tariffs as a stabilizing force 2 5. This perspective, however, is contested by many economists who argue that the historical context and economic conditions of the time do not support such a claim.
Historical Consensus: A significant number of economists and historians agree that while the Smoot-Hawley Tariff had detrimental effects on international trade and economic recovery, it was not the primary cause of the Great Depression. The consensus is that it contributed to the economic downturn but was part of a larger set of factors 4 10.

Analysis

The claim that tariffs caused the Great Depression is supported by a variety of sources, but the reliability and bias of these sources vary.

Credibility of Sources: Academic sources such as the Cato Institute and the Corporate Finance Institute provide well-researched analyses of the Smoot-Hawley Tariff and its impacts, lending credibility to the assertion that tariffs played a role in exacerbating the economic crisis 4 10. However, these sources may also have ideological biases, particularly the Cato Institute, which often advocates for free-market policies.
Methodological Concerns: Many analyses rely on historical economic data and retrospective evaluations of the period. While these methods can provide insights, they also face challenges such as the difficulty of isolating the effects of tariffs from other concurrent economic factors. For instance, the claim that tariffs were a primary cause may oversimplify the complex interplay of economic conditions at the time 9.
Conflicting Views: Some sources, like the article from Distractify, suggest that while tariffs were significant, they were not the only reason for the Great Depression, indicating a more nuanced view 3. This aligns with the broader academic consensus that recognizes multiple contributing factors.
Potential Conflicts of Interest: Some contemporary discussions surrounding tariffs, particularly those linked to political figures, may reflect current economic agendas rather than objective historical analysis. For example, Trump's comments on tariffs could be seen as an attempt to justify current trade policies rather than an unbiased historical assessment 2 5.

Conclusion

Verdict: Partially True

The assertion that tariffs caused the Great Depression is partially true. The Smoot-Hawley Tariff Act did raise tariffs significantly and is widely recognized as having contributed to the economic downturn by provoking retaliatory measures from other countries. However, it is important to note that tariffs were not the sole cause of the Great Depression; they were one of many factors, including stock market speculation, banking failures, and a decline in consumer spending, that collectively influenced the economic crisis.

The complexity of the economic conditions during the Great Depression means that while tariffs played a role, they were part of a broader set of interrelated issues. The evidence suggests that while tariffs had detrimental effects on international trade and recovery efforts, their impact should not be overstated as the primary cause of the Great Depression.

It is also crucial to acknowledge the limitations in the available evidence. Many analyses rely on historical data that can be difficult to interpret, and the ideological biases of some sources may affect their conclusions. Therefore, readers are encouraged to critically evaluate information and consider multiple perspectives when assessing historical claims.

Sources

CGTN. "U.S. 'reciprocal tariffs' may accelerate American economic ..." YouTube.
Boston.com. "Trump says high tariffs may have prevented the Great ..." Boston.com.
Distractify. "Did Tariffs Cause the Great Depression? What To Know" Distractify.
Corporate Finance Institute. "Smoot-Hawley Tariff Act - Overview, Legislative History, ..." CFI.
Barron's. "Tariffs History: Trump's Plans Are Toughest Since the Great ..." Barron's.
Economics Help. "The Impact of Trump Tariffs" Economics Help.
History.com. "How Tariffs Under the Smoot-Hawley Act Triggered a ..." History.com.
Tax Foundation. "Trump Tariffs Would Raise Rates to Great Depression-Era ..." Tax Foundation.
Investopedia. "The Great Depression: Overview, Causes, and Effects" Investopedia.
Cato Institute. "The Smoot-Hawley Tariff and the Great Depression" Cato.