USA HISTORY

Detailed explanation-1: -Barriers to trade reduce economic output and incomes When countries erect barriers to trade, such as tariffs, they raise prices and divert resources away from relatively efficient economic activities towards less efficient economic activities.

Detailed explanation-2: -What Is a Tariff War? A tariff war is an economic battle between countries where each levies an additional tax on the other’s exports. Tariff wars generally start when leadership in one country is unhappy with a trade partner’s trading behavior or for geopolitical reasons.

Detailed explanation-3: -The Smoot-Hawley Act increased tariffs on foreign imports to the U.S. by about 20%. At least 25 countries responded by increasing their own tariffs on American goods. Global trade plummeted, contributing to the ill effects of the Great Depression.

Detailed explanation-4: -It raised the price of imports to the point that they became unaffordable for all but the wealthy, and it dramatically decreased the amount of exported goods, thus contributing to bank failures, particularly in agricultural regions.