Economists differ on how much blame the Smoot-Hawley tariffs deserve for the Great Depression. They also disagree on how much credit President Franklin Roosevelt deserves for the Reciprocal Tariff Act, which put the U.S. on a path to lower tariffs.

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But the stock market had no trouble choosing sides.

A look back at two pivotal bills — the Smoot-Hawley Act and the Reciprocal Tariff Act — and the Dow’s reaction, might serve as a cautionary tale for President Trump.

Put simply, the stock market doesn’t like tariffs, and if Trump pushes it too far, he could sink the stock market.

Let’s look at key news events surrounding the protectionist Smoot-Hawley bill that President Hoover signed in 1930 and the more free-trade oriented Reciprocal Tariff bill that FDR signed in 1934.

The Evidence

The circumstances listed here do not prove causation. That’s for economists and historians to settle. Stock analysts are interested in only one thing: How did the market react?

Here’s the evidence:

May 28, 1929: House passes Smoot-Hawley legislation, (1) but it’s not clear that it will become law.

Oct. 21, 1929: Senate rejects move to limit tariffs to agriculture.

Oct. 28, 1929: A delegation of senators urges Hoover to push through the tariffs. Hoover agrees.

Oct. 29, 1929: Stock market crashes (2).

March 24, 1930: Senate passes Smoot-Hawley bill.

May 4, 1930: 1,028 economists warn Hoover against tariffs.

June 17, 1930: Hoover ignores economists and signs Smoot-Hawley (3).

The economy skids. GDP drops 8.5% in 1930, 6.4% in 1931 and 12.9% in 1932.

July 8, 1932: With Hoover’s policies failing, the Tariff Commission trims 18 tariffs.

Sept. 19, 1932: Presidential candidate FDR calls tariffs “the road to ruin.”

March 4, 1933: FDR becomes president (4).

June 12, 1934: President Roosevelt signs the Reciprocal Tariff Act to cut tariffs (5).

The economy rebounds: GDP grows 10.8% in 1934, 8.9% in 1935 and 12.9% in 1936.

Warnings Ignored

What can an investor conclude from this? Expectations surrounding Smoot-Hawley affected the market. And the run-up to the Reciprocal Trade Act triggered a rally.

Circumstances differ today. The U.S. economy is growing. Yet, other things are similar. In 1930, 1,028 economists warned Hoover in a letter. On May 3 of this year, 1,140 economists echoed history when they warned Trump not to take the tariff path.

There’s no sign the recent letter had any more effect on Trump than it did on Hoover.

Trump still has time to correct the mistake. If he doesn’t, the stock market could be headed for trouble.

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