In 1930, as the Great Depression ravaged the United States, President Herbert Hoover made a bold economic decision.
With the goal of supporting American farmers and manufacturers, he approved a sweeping 20% tax on all imported agricultural and industrial goods.
He believed making foreign goods more expensive would encourage consumers to buy domestic, thus funneling cash into American businesses and creating more jobs.
But Hoover's plan completely backfired.
Other countries retaliated by taxing American goods, leading exports to fall and global trade to decline.
In the end, this policy led American prices to spike and caused even more unemployment.
These disastrous outcomes of the Smoot-Hawley Tariff Act were no surprise to the over one thousand economists who publicly condemned the bill.
But this wouldn't be the last time a world leader was shocked by a tariff's consequences.
So what exactly is a tariff?
A tariff is a tax an importer pays to bring foreign goods into a country.
