Final answer:
The Hawley-Smoot Tariff Act caused a decline in international trade by prompting retaliatory tariffs from other nations, worsening the global depression, and contributing to widespread economic hardship including business failures and high unemployment.
Step-by-step explanation:
The Hawley-Smoot Tariff Act of 1930 significantly affected worldwide trade by imposing high tariff rates on imported goods into the United States, with the aim of protecting American farmers and industries from foreign competition. Unfortunately, this act led to international retaliatory measures, where other countries increased their tariffs on U.S. goods, leading to a sharp decline in global trade volume. As other nations mirrored the U.S. approach and installed their own protective tariffs, the export market for American goods contracted sharply, adding further strain to an economy already reeling from the Great Depression. World trade plummeted by approximately 30 percent, exacerbating the economic downturn globally.
President Hoover's administration believed that higher tariffs on imports paired with business-government cooperation in expanding into foreign markets would stimulate the economy. However, these policies were counterproductive, as other nations imposed similar tariffs, leading to the collapse of international trade and contributing to the depth and length of the global depression. Domestically, the industrial and agricultural sectors suffered because of decreasing export opportunities, which resulted in bankruptcy for businesses and increased unemployment, reaching a staggering rate of 25 percent by 1933.
The legacy of the Smoot-Hawley Tariff has served as a historical lesson on the dangers of protectionism. This led to the establishment of international agreements like the General Agreement on Tariffs and Trade (GATT) and later the World Trade Organization (WTO) to promote trade liberalization and reduce tariff barriers.