Question

When Congress passed the Smoot-Hawley tariff to help alleviate conditions of the Great Depression, why was it actually the wrong thing to do?
A) It greatly reduced foreign trade, which would have helped American companies.B) It caused too much foreign competition, forcing companies to go under.C) Higher rates cost American companies too much money, and they laid people off.D) The lower rates brought too many foreign goods into the country, hurting business.

Answer 1

The correct answer is A)It greatly reduced foreign trade, which would have helped American companies.

A tariff is a tax on an imported good. The goal of implementing a tariff is to protect the business interests of domestic companies. This type of tax was thought to have helped American businesses during the Great Depression. However, it had the opposite effect.

Due to the tariffs, many foreign businesses reduced or completely eliminated their trade with the United States. This reduction in trade hurt American businesses, as it limited their market in terms of who they could sell their goods too.