With President Trump’s sweeping new tariffs rattling global markets, some are drawing comparisons to the Smoot-Hawley Tariff Act of 1930, which is widely blamed by historians worsening the Great Depression. That law raised tariffs on hundreds of imports in an effort to shield American farmers and manufacturers. Instead, it triggered a wave of retaliation, slowed global trade, and deepened the downturn.
 

President Trump’s 2025 tariffs are broader in scope though they are being implemented in a very different global economy. They include a flat 10% tariff on all imports, plus much higher “reciprocal” tariffs on countries with large trade surpluses, including a 125% rate on Chinese goods as of this week. The market reaction was immediate. Stocks fell sharply, global indexes dropped, and U.S. Treasurys sold off. President Trump recently announced a 90-day pause on tariffs for most countries and temporarily lowered the reciprocal rate to 10%. Markets rebounded on the news, but uncertainty remains.
 

While Smoot-Hawley and President Trump’s actions both reflect moments of rising economic protectionism, the economic environments they are responding to could not be more different. 

In 1930, the United States – which was then world’s the manufacturing powerhouse – was a net exporter, running a trade surplus of about $1 billion, about $19 billion in today’s dollars. At the same time, in a world not nearly as globalized as it is today, only 6% of the economy was tied to international trade. So, Smoot-Hawley was meant to protect a mostly self-contained economy dominated by agriculture and manufacturing.
 

Today, the U.S. runs a nearly $1 trillion trade deficit – about the size of the entire economy in 1930. Trade accounts for roughly 25-30% of GDP, or about $5 trillion. The economy is far more globalized, with multinational companies operating supply chains that stretch across continents and industries, and American consumers have far more foreign options when it comes to picking a car, a dishwasher, or even just a pair of shoes. Meanwhile, most Americans now work in service sectors like healthcare, technology, and finance, areas largely unaffected by tariffs on goods – though still subject to downstream effects.
 

The structure of the tariffs also reflects this shift. Smoot-Hawley raised duties on about 25% of imports, mostly in agriculture and industrial sectors which were most vulnerable to foreign competition. President Trump’s tariffs apply across the board, with extra penalties on specific countries and targeted measures in sectors where the U.S. faces more established competition, like steel, semiconductors, autos, and pharmaceuticals (with the latter expected soon).
 

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President Trump’s stated goal is to narrow the trade deficit – a long-time goal of his – and bring production back to the U.S. Whether those policies will work in today’s economy remains to be seen. But the comparison to Smoot-Hawley only goes so far. Both policies sought to protect American industry. But the tools, the targets, and the global context are entirely different.