During a winding speech to mark the so-called Liberation Day, Trump presented an alternative history where steep tariffs, like the ones he’d come to celebrate, could have prevented the worldwide economic disintegration of the early 20th century.
“Then, in 1913 for reasons unknown to mankind they established the income tax so citizens, rather than foreign countries, would start paying the money necessary to run our government,” he said.
Trump’s revisionist history is designed to promote his economic agenda—not reflect what actually happened. Not only could tariffs not have prevented the Great Depression, they made it even worse.
At the same time, Congress passed the Underwood Simmons Tariff Act that lowered tariff rates from 40 percent to 27 percent, in a Democrat-backed effort to promote free trade. Crucially, tariffs were raised again in 1921 after Republican President Warren Harding entered the White House, and began a reinvigorated era of protectionism.
Smoot-Hawley was disastrous for not only the U.S. economy, tanking U.S. exports to Europe from $2,341 million in 1929 to just $784 million in 1932, but also global trade, which declined by a whopping 66 percent between 1929 and 1934, according the U.S. Office of the Historian. The effects of Smoot-Hawley were so awful that it marked the end of steep tariffs in American trade policy for the rest of the 20th century.
Trump’s baseless insistence that lowered tariffs led to the Great Depression is representative of his entire economic policy, and just how untethered from reality it has become.
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