President Trump is reaching into the 1930s playbook to justify a fresh round of tariffs. On Monday, he announced a 50% levy on select Canadian imports set to take effect in August, citing Section 338 of the Smoot-Hawley Tariff Act as his legal foundation. The move targets roughly $20 billion in Canadian goods and marks the first time this particular provision has been deployed since the law passed in 1930.
The White House framed the action as a narrow response to what it calls unfair Canadian trade practices and retaliatory measures. Spokesman Kush Desai said the tariffs were "targeted" and distinguished them sharply from the sweeping 1930 tariff regime that economists have long associated with deepening the Great Depression.
Trump's pivot to this dormant authority comes as his tariff-wielding powers face judicial constraints. The Supreme Court has tightened his ability to impose duties unilaterally, and a temporary tariff arrangement is set to expire. By invoking a century-old statute, Trump is circumventing recent legal limits on executive tariff authority while maintaining his protectionist agenda.
The Canadian tariff announcement follows a broader breakdown in trade relations between Washington and Ottawa. The administration declined to immediately renew the current protections and framework established by the U.S.-Mexico-Canada Agreement, further destabilizing North American commerce.
The Smoot-Hawley Legacy
When Congress passed the Smoot-Hawley Tariff Act in 1930, lawmakers were responding to economic free fall. Sen. Reed Smoot of Utah and Rep. Willis Hawley of Oregon backed the law initially to shield American farmers from cheaper foreign grain. The measure quickly expanded to cover manufactured goods broadly, with President Herbert Hoover signing it on June 17, 1930. The tariff raised average rates by roughly 20%, triggering a cascade of retaliation from other countries.
Within two years, about two dozen nations had responded with their own tariffs, shrinking global trade significantly. American automakers took a particular hit, with countries reducing their purchases of U.S.-made cars by approximately 46%, according to research from the National Bureau of Economic Research.
The law became deeply unpopular. Voters shifted Congress to Democratic control in 1932 and ousted both Smoot and Hawley from office. President Franklin D. Roosevelt later signed the Reciprocal Trade Agreements Act in 1934, which took a different approach by allowing presidents to negotiate tariff reductions bilaterally. Roosevelt used that authority to strike deals with 19 countries between 1934 and 1939, laying groundwork for post-war trade liberalization.
Economists have long debated Smoot-Hawley's role in the Depression. The NBER found that while international trade accounted for less than 10% of the U.S. economy, the tariff-driven collapse in global commerce did deepen an economic crisis already underway. The law did not cause the Depression, but it worsened the collapse.
The irony of invoking Smoot-Hawley is unavoidable. While Trump's advisers insist this invocation differs fundamentally from Depression-era protectionism, critics see a familiar pattern: tariffs sold as defensive measures that risk triggering retaliation and trade wars.
Author James Rodriguez: "Using a law named for two politicians voters threw out of office sends an odd signal about what Trump thinks he can get away with."
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