Sen. Mitch McConnell (R-Ky.) said in a recent interview that today's economic backdrop shares "certain similarities" with the 1930s, pointing to President Herbert Hoover's 1930 Smoot-Hawley Tariff Act and the era's isolationist "America First" politics.
Smoot-Hawley's Legacy And Parallels To Today's Economy
"I think this is the most dangerous period since before World War Two. There's certain similarities right now to the '30s. Herbert Hoover signed the Smoot-Hawley tariff bill in 1930, widely believed by historians and economists to have taken the depression worldwide," McConnell told the Lexington Herald-Leader, adding that isolationists of the time "were called ‘America First.' Sound familiar?"
Economists broadly agree Smoot-Hawley Tariff Act worsened the Depression, though most say it did not cause it. The tariff triggered retaliation and deepened a collapse in global trade, exacerbating the downturn that was already underway due to monetary and financial shocks, according to historical summaries and economic research.
Mitch McConnell Warns Tariffs Risk Trade War Costs
That history has colored debate over the Trump administration's wider use of tariffs. McConnell publicly criticized the strategy earlier this year, warning that broad import levies risk a trade war and higher prices for U.S. consumers and businesses. "Tariffs are going to be paid for by the American people," he said in February, calling the approach a bad idea while noting he still expects to support much of the administration's agenda.
Economists Warn Sweeping Tariffs Could Repeat History
Wharton School finance professor emeritus Jeremy Siegel in April argued that Trump’s sweeping tariff policy could be more damaging than the infamous Smoot-Hawley Tariff Act. “I don’t know why Trump didn’t learn the lesson of the Smoot-Hawley Tariff [Act], because I know the [Federal Reserve] learned the lesson of its mistakes in 1930, ’31 and ’32,” Siegel said during a CNBC interview.
American Economist Jeffrey D. Sachs, meanwhile, said a tariff war would be America’s third major misstep, linking Trump’s tariff policies to the Smoot-Hawley tariffs and the 2008 financial meltdown.
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