Automotive News has been celebrating its 100-year anniversary by running articles that offer historical context about current events. The Trump administration’s “Liberation Day” tariffs would be a particularly valuable topic for this treatment.
Unfortunately, so far the trade journal’s reportage has been pretty nuts and bolts. That’s useful to a point, but it doesn’t emphasize important context: Trump’s tariffs don’t represent the usual incremental policy changes a new president makes when he or she is from a different party. Instead, they reflect the most significant shift in U.S. trade policies in almost a century.
If Trump goes through with his threats, the U.S. will have the highest tariff rates since the early-1930s, when President Herbert Hoover signed into law the Smoot-Hawley Act. This legislation has been widely blamed by economists for fueling the Great Depression by increasing tariffs on foreign goods, which led to retaliation and a major contraction in international trade (Reynolds, 2015).
After Franklin D. Roosevelt was elected president in 1932, he went in the opposite direction from Hoover. Since then the U.S. has played a central role in creating the world’s current trading system — largely regardless of which party was in power.
Is Trump right that the U.S. took a wrong turn?
“Yesterday Donald Trump burned it all down,” economist Paul Krugman (2025) concluded. The tariffs the president announced represent “a much bigger shock to the economy than the Infamous Smoot-Hawley tariff of 1930, especially when you bear in mind that international trade is three times as important as it was then.”
It may be too soon to assess the impacts of Trump’s tariffs, but they do raise a historical question: Is Trump right that the U.S. took an evolutionary wrong turn on trade policies? Would U.S. automakers have been better off if high tariffs had been maintained through the postwar era (which I would define as 1945-1980)?
High tariffs might have removed a key advantage that imports held, which was that their economy models typically had much lower prices than Detroit’s entry-level cars. Might that have translated into much lower import sales — and less pressure on U.S. automakers to offer smaller and more practical cars?
Also see ‘Five things to consider as you follow the news on Trump’s automotive tariffs’
Or might high tariffs have merely given independent automakers such as American Motors and Studebaker a bigger boost in the late-50s, when they would have offered the only affordable alternative to the Big Three’s usual fare?
I could also see how some foreign automakers who sought a foothold in the U.S. market might have had more of a motivation to partner with an independent automaker much earlier than Renault did with AMC. And once Japanese automakers managed to gain a foothold, my guess is that they would have still overshadowed domestic producers because their cars were better.
So in the end, high trade barriers might well have delayed the decline and fall of Detroit — but not prevented it. That’s my take; what’s yours?
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RE:SOURCES
- Krugman, Paul; 2025. “Will Malignant Stupidity Kill the World Economy?” Posted April 3.
- Reynolds, Alan; 2015. “The Smoot-Hawley Tariff and the Great Depression.” Cato Institute. Posted May 7.
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