Economic nostalgia woos voters, but it leads to terrible policies

History may not perfectly repeat itself, but it often rhymes. Two protectionist episodes — the infamous Smoot-Hawley Tariff Act of 1930 and the Trump-era tariffs of today — offer a striking example. Both emerged from economic nostalgia and fear of change. Both were politically attractive. And both were costly, backward-looking mistakes that undermined the economies they were meant to protect.

Smoot-Hawley was conceived in an America uneasy about economic transformation. In the 1920s, while the economy was otherwise booming, farmers were in crisis. After a postwar boom, crop prices had collapsed and rural debt soared. About one-quarter of the labor force still worked in agriculture, down from one-half a few decades before. Many Americans longed for an earlier era when agriculture was dominant and prosperous.

Foreign competition was the scapegoat. Politicians seized on this frustration. Promising protection from cheap imports was an easy way to win votes. The result was a tariff that raised duties on more than 20,000 goods by an average of about 20%.

Smoot-Hawley’s intent was to reduce imports and raise domestic prices, especially for farmers. But the plan backfired quickly. U.S. trading partners retaliated as Canada, Mexico, Cuba, Britain, France and others imposed their own tariffs. Exports plummeted, imports became more expensive, and global economic conditions deteriorated.

The timing couldn’t have been worse. The Great Depression had begun and the stock market, which had been slowly recovering from the 1929 crash, dropped again when the bill became law. Instead of stabilizing, the U.S. sank further into depression. Far from rescuing American farmers, the tariffs deepened their crisis. Between 1929 and 1934, global trade collapsed by 65%.

Today, Smoot-Hawley is widely regarded as a catastrophic error.

Now fast-forward to the new wave of protectionist nostalgia, this time aimed at restoring manufacturing. Trump’s 2016 campaign promised to revive the lost era of factory jobs and industrial strength. And like 1920s Republicans blaming foreign crops for the collapse of agriculture, Trump blamed imported manufactured goods.

Never mind that America had long since shifted to a service-based economy or that manufacturing accounted for just 10% of jobs by 2016. The emotional appeal of “Make America Great Again” rested on a nostalgia-drenched longing for the age of smokestacks and assembly lines — and a broad and homogeneous middle class — before globalization and automation transformed the economy.

When Trump took office again in January, he inherited a robust economy that had further improved after his election, based on investors’ anticipation of pro-growth policies. Instead, the administration turned toward economic nationalism and shot the economy in the foot.

The culmination came on April 2, when Trump announced sweeping “Liberation Day” tariffs of 10% on all imports and additional steep, targeted tariffs against counterparts such as China, Japan, Vietnam and the European Union. He pitched it as a patriotic effort to restore sovereignty and rebuild industry.

As we know, the fallout was immediate. Markets tanked, and trade partners threatened retaliation, with some even taking action. Economists warned of rising costs, damaged supply chains and diplomatic tensions. Australia, among others, condemned the move as economically hostile. Small businesses sued the administration, arguing that the tariffs exceeded presidential authority and inflicted serious harm.

And just as Smoot-Hawley hurt the farmers it was meant to help, Trump’s tariffs are hurting manufacturers. Far from delivering industrial renewal, they’ve led to layoffs at manufacturing plants.

In the end, despite its populist packaging, Liberation Day marked a dramatic escalation of failed protectionist thinking. It also revived 1930s-style nationalist rhetoric.

The two blunders have one more thing in common: cronyism. According to economic historian Douglas A. Irwin, Smoot-Hawley was not primarily about ideology. It was about interest-group politics: an ad hoc scramble driven by constituent demands, sectoral lobbying and legislative bargaining.

In the same way, Trump’s tariffs have revived the lobbying for tariff exemptions we saw in his first term. Apple got an exemption for the iPhone and now, understandably, everyone else wants one. As the Cato Institute’s Scott Lincicome commented on X, “The cronyism buffet line is now open.” National Review’s Dominic Pino calculated that tariff lobbying spending is up by 277%.

The lesson is clear: Economic nostalgia is a poor guide to sound policy. Smoot-Hawley and Trump’s tariffs represent attempts to re-create a romanticized past — one of small farms or bustling factories — rather than to embrace the reality of a changing world. But economies are dynamic. Trying to freeze them in place with trade barriers doesn’t stop change; it just makes the transition harder, costlier and more painful.

History judged Smoot-Hawley harshly. The final verdict on Trump’s tariffs is not yet written, but the early signs are familiar. If we want prosperity, we must look forward, not backward. The future belongs to those who embrace change and creative destruction, not those who resist it.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.