Amid Trump tariffs, the econ lesson Ferris Bueller missed
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Ben Stein as a high school economics teacher in "Ferris Bueller's Day Off." Photo: CBS via Getty Images
As President Trump enacts his protectionist trade agenda, a Depression-era tariff law is gaining new relevance: The Smoot-Hawley Act of 1930.
The intrigue: The Act, sponsored by Utah's Sen. Reed Smoot, earned its modern fame in 1986 as the boring classroom arcana that illustrates why Ferris Bueller couldn't possibly be expected to handle school on a day like this.
- Welcome to Old News, our weekly fake fever dream about Utah's past.
Flashback: In his blockbuster "Ferris Bueller's Day Off," John Hughes cast Ben Stein, a presidential speechwriter for Richard Nixon and Gerald Ford, as the droning econ teacher whose class Bueller ditches.
- Stein explains to the glazed-over students how the 1930 tariffs backfired by stopping trade rather than generating tax revenue.
Reality check: The tariffs were less about collecting revenue than giving American businesses an advantage.
Context: In the 1920s, technology like automobiles and electricity rapidly made farms and factories so productive that the U.S. ended up with an oversupply of many goods.
- That lowered prices to where many businesses were selling at a loss.
Zoom in: Farmers were at particular risk, and their commodities and land were losing value well before the 1929 stock crash.
- Taxing imports would stabilize prices domestically, protectionists argued.
Yes, but: Other industries wanted their own tariffs, and they found a receptive audience in Smoot — the "high priest of tariff protection," per the Salt Lake Telegram.
- If you stuck a lump of coal through Smoot's tariffs, in two weeks you'd have a lump of coal that costs as much as a diamond.
What happened: Smoot and Oregon Rep. Willis Hawley drafted what became the second-highest tariff rates in U.S. history.
Did it work? Anyone? It did not work.
- Other countries retaliated with their own tariffs. Global trade petered out. The score was nothing to nothing, and the Bears were winning.
The bottom line: The Great Depression got worse, and the Smoot-Hawley Act is now seen as one of the "most catastrophic acts in congressional history."
- After five Senate terms, Smoot lost his next election — as did Hawley and then-President Hoover.
- Hoover, who signed the act reluctantly, is particularly maligned for not having the backbone to rein in its scope. The meek get pinched, the bold survive.
Fast forward: During Trump's first term, economists compared his trade positions to Smoot-Hawley, even quoting from the warnings economists sent to Hoover in 1930.
State of play: Those comparisons have revived since Trump promised broader tariffs during his second term — including one from Stein himself.
- Trump is now ushering in an era in which trade policy is managed country by country, using sweeping tariffs to address what his administration calls unfair trade dynamics, Axios' Courtenay Brown reports.
The latest: He recently threatened reciprocal tariffs on any country with import duties that are higher than what the U.S. charges.
What we're watching: Whether Trump makes good on a separate, 25% tariff against Canada and Mexico.
- That is now set to take effect March 1 after being pushed back earlier in February.