The Smoot-Hawley Trade War

Abstract We document the outbreak of a trade war after the United States adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested, with many eventually choosing to retaliate with tariffs. Using a new quarterly dataset on bilateral trade for ninety-nine countries, we show...

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Bibliographic Details
Published in:The Economic journal (London) 2022-10, Vol.132 (647), p.2500-2533
Main Authors: Mitchener, Kris James, O'Rourke, Kevin Hjortshøj, Wandschneider, Kirsten
Format: Article
Language:English
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Summary:Abstract We document the outbreak of a trade war after the United States adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested, with many eventually choosing to retaliate with tariffs. Using a new quarterly dataset on bilateral trade for ninety-nine countries, we show that U.S. exports to retaliators fell by 28%–32%. Using a second new dataset on U.S. exports at the product level, we find that the most important U.S. exports to retaliating markets were particularly affected, suggesting a possible mechanism whereby the United States was targeted despite most-favoured-nation obligations. The retaliators’ welfare gains from trade fell by 8%–16%.
ISSN:0013-0133
1468-0297
DOI:10.1093/ej/ueac006