On June 17, 1930, the sky in Washington was clear and cloudless.

Inside the Oval Office of the White House, President Herbert Hoover signed the Smoot-Hawley Tariff Act with a gold-plated pen. The words "Protect American Industry" on the document stood out vividly in the sunlight. Secretary of State Henry Stimson dissuaded him for the last time, saying, "Another 200 economists joined the opposition camp yesterday." Hoover looked out the window and said, "The streets are full of unemployed workers, and farmers are selling their grains at extremely low prices. We must protect the job opportunities of Americans!"

Three months later, the Canadian ambassador to the United States received an urgent telegram from Ottawa, announcing retaliatory tariffs on American agricultural products - thus the prelude to the global trade war was opened.

01 Prologue

Every major decision has its own historical background, and the United States in the 1930s was in a difficult situation of being forced to respond.

On "Black Thursday" in 1929, in the New York Stock Exchange, the Dow Jones Industrial Average plummeted. The trading hall was filled with shouts of "Sell everything!" The single-day loss on Wall Street was equivalent to the wealth of $45 billion today. At that time, small farmers in the countryside, although not directly affected by the stock market crash, had already been envious of the prosperity of Wall Street due to the squeezing of their livelihoods by the low-priced French wheat. These emotions were regarded by politicians as issues that could be exploited.

02 Curve

During the economic crisis, Capitol Hill was crowded with politicians lobbying for their interests. The initial tariff bill targeting agricultural products kept expanding under the games of steel magnates and textile tycoons. Henry Ford, the founder of Ford Motor, burst into a Senate hearing, threw down a thick report and asked, "Do you know the consequences of doing this?" But he was ridiculed by a senator, "Go back and worry about your Model T cars."

On June 13, 1930, the bill passed with 222 votes in favor and 153 votes against. Four days later, Hoover signed it in the White House. Officials such as Ogden Mills, the Undersecretary of the Treasury, looked worried.

03 Climax

In 1931, the port of New York was deserted because British cargo ships diverted to Australia. The Detroit automobile factory laid off 30% of its workers due to Canada's 50% retaliatory tariffs - the workers who had once cheered for the "protection bill" now looked at each other in dismay. The corn of farmers in the Midwest piled up like mountains, and the price dropped below the freight cost. Eventually, they were forced to close their farms.

The data was shocking: From 1929 to 1933, the global trade volume plummeted by 60%, and the exports of the United States dropped sharply from $5.4 billion to $1.6 billion; the unemployment rate soared from 3% to 25%, and one in every four people was unemployed; the GDP shrank by nearly 30%. In Chicago, long queues of unemployed people stretched through the streets, and the middle class received free bread at relief stations.

04 Finale

In 1933, the Roosevelt administration discovered that documents revealed the cost of high tariffs. The following year, the Reciprocal Trade Agreements Act was passed, authorizing the president to negotiate for tariff reductions and breaking the average tariff barrier of over 50% in the United States. From 1934 to 1939, the United States signed agreements with 22 countries, and its exports to the countries with agreements increased by 61%, and the tariffs dropped from 46% to 25%. Its principle of reciprocity became the core of the General Agreement on Tariffs and Trade (GATT) in 1947, laying the foundation for the post-war multilateral trading system and still having an impact today.

05 Epilogue

In the archives of the Federal Reserve Bank of New York, on the joint letter of 1,028 economists in 1930, the sentence "The wall built by tariffs will eventually trap oneself" was repeatedly marked. History, such as the Cuban Missile Crisis and the confrontation at Checkpoint Charlie in Berlin, ultimately avoided disasters through compromise. 

The tariff war should also be the same - at the negotiation table, it takes courage to persist, and it takes wisdom to compromise.