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The Smoot-Hawley Trade War

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  • Kris James Mitchener
  • Kirsten Wandschneider
  • Kevin Hjortshøj O'Rourke

Abstract

We document the outbreak of a trade war after the U.S. adopted the Smoot-Hawley tariff in June 1930. U.S. trade partners initially protested the possible implementation of the sweeping tariff legislation, with many eventually choosing to retaliate by increasing their tariffs on imports from the United States. Using a new quarterly dataset on bilateral trade for 99 countries during the interwar period, we show that U.S. exports to countries that protested fell by between 15 and 22 percent, while U.S. exports to retaliators fell by 28-33 percent. Furthermore, 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 U.S. was targeted despite countries’ MFN obligations. The retaliators’ welfare gains from trade fell by roughly 8-17%.

Suggested Citation

  • Kris James Mitchener & Kirsten Wandschneider & Kevin Hjortshøj O'Rourke, 2021. "The Smoot-Hawley Trade War," NBER Working Papers 28616, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28616
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    References listed on IDEAS

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    3. Toptancı, Ali İskan, 2021. "RETRACTED PAPER: "Macroeconomic effects of the trade wars: Smoot-Hawley Protectionism Tariff"," EconStor Preprints 232553, ZBW - Leibniz Information Centre for Economics.
    4. Bernardo Candia & Mathieu Pedemonte, 2021. "Export-Led Decay: The Trade Channel in the Gold Standard Era," Working Papers 21-11r, Federal Reserve Bank of Cleveland, revised 08 Nov 2021.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • N72 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - U.S.; Canada: 1913-

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