Question

How did the Smoot-Hawley Tariff Act of the United States effect the global depression?

Legislation like the Smoot-Hawley Tariff Act increased the value of European currency.

This political action resulted in foreign trading being reduced by two-thirds in the 1930s.

The Smoot-Hawley Tariff Act increased the value of the American dollar around the world.

Foreign trading partners were able to dump their surplus products on American markets.

Answer 1

Only statement 2 is correct.

- Statement 2 (true): World trade collapsed in the early 1930s—exports and imports fell by roughly two‑thirds from their pre‑Depression levels. Smoot‑Hawley contributed to that collapse by raising U.S. tariffs and provoking retaliatory tariffs abroad, which sharply reduced international commerce.

- Statement 1 (false): Smoot‑Hawley did not raise European currencies. In fact, the crisis produced large exchange‑rate movements (many countries left the gold standard and devalued), not a broad rise in European currencies caused by U.S. tariffs.

- Statement 3 (false/misleading): The Act did not “increase the value of the American dollar around the world” as a direct or intended consequence. Currency movements in the period were driven mainly by gold‑standard policies, deflation, and countries’ decisions to devalue or leave gold, not by U.S. tariff legislation.

- Statement 4 (false): Tariffs make it harder, not easier, for foreign producers to “dump” surplus goods on U.S. markets. Smoot‑Hawley’s higher duties aimed to block foreign competition; instead, foreign governments responded with retaliatory tariffs, which reduced exports on both sides.

Bottom line: Smoot‑Hawley worsened the global depression by shrinking trade and provoking retaliation, not by strengthening foreign currencies or enabling foreign dumping.