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One particular clip from the film going viral today features a dull history teacher teaching the unengaged class about a United States tariff that was put on Canadian goods back in 1930.

It was called the , named after the two U.S. politicians who brought it forward.

In the classic scene, the teacher, played by Ben Stein, asks “Anyone? Anyone?” as he looks for a response to his questions, which he ends up answering himself.

“It did not work, and the United States sank deeper into the Great Depression,” the teacher concludes.

A history lesson

Speaking with University of Toronto history professor Dimitry Anastakis, he explained the circumstances behind the need for that very tariff a century ago.

“In the 1920s the Republicans in congress were always more protectionist,” Anastakis said. “They proposed this tariff in response to the declining economic situation in the United States.”

At that time, North America was in the throws of the Great Depression, following the Great Crash of the stock market in 1929.

The tariffs proposed by Sen. Reed Smoot and Rep. Willis C. Hawley were around 60 per cent, the highest ever imposed.

The tariff act was signed into law by President Herbert Hoover on June 17, 1930.

“It was not the cause of the Great Depression, but it certainly exacerbated it,” he said. “It was the first economic downturn, and you almost wanted to give them a break, because they were going to try something (to succeed).”

However, it backfired. It was such a high tariff, it meant companies eventually stopped selling their products in the U.S.

“They realized it was ridiculous to even bother trying to import because the tariff was so high.”

The original thought was if more money was charged on goods coming into the country, it would mean more money into the government coffers.

It would also mean local production of goods would expand.

“Back in 1930, Canada retaliated (with tariffs), and other countries imposed tariffs. They may not have as high as Smoot-Hawley, but did the same thing. It really did exacerbate the trade difficulties that were already occurring, in an era where consumer demand was shaping how the economy functions.”

There might not have been as much globalized goods delivered back then as now, but industrialization was booming, and Canada had a lot of external trade.

“A lot of our economy was pulp and paper that was exported to the United States. Our logistics might not have been quite as expansive, but global trade since the 19th century has been extensive.

“In North America, the level of integration was so much greater back then — in fact, it was a bigger problem for a domestic economy.”

Canada exported a lot of cars to other countries within the British Commonwealth, Anastakis said, and those countries tried to impose fewer tariffs to boost trade.

However, even the auto industry saw a decline in the 1930s — although the Great Depression may have also had a hand in that.

Following the failure of the Smoot-Hawley Tariff in the United States, Anastakis said Hawley lost his seat in 1932, the Republicans lost the election and President Franklin D. Roosevelt went on to pass the Reciprocal Trade Agreements Act of 1934 to lower tariffs.

Modern day reflection

Anastakis said we are seeing a similar scenario play out today, with many economists even suggesting a recession may be on the horizon.

“You have an immediate impact, which means you’re raising the price for everybody,” he said. “People who import will have to pay that tariff to the government and they usually pass those costs onto the consumer.”

Smoot-Hawley acts as a real symbol and warning to the kinds of “irrational tariff scrimmage” going on today.

“Any U.S. president would not have done this, knowing their history, because they would have known that it’s going to be very costly.”

Using the auto industry as an example, Anastakis said there are some vehicle parts that cross the Canada-U. S. border five to eight times before the vehicle is complete. And each time that happens, another tariff would be charged.

“Every time it goes back across the border, it’s going to get charged. So a price of a car is probably going to go up $3,000 to $6,000,” he said.

A historic moment

As a historian, Anastakis is watching the tariff wars with excitement.

“It’s a fascinating time to be a historian, but it’s a pretty scary time to be a regular person.”

Like many in North America, Anastakis watched as the U.S. stock market plummeted as Trump made his tariff announcement earlier this week.

“The American economy, as of a couple of weeks ago, was in pretty good shape. It had low unemployment, and because of the measures imposed in the Inflation Reduction Act under (President Joe) Biden, we were looking at an American economy that had been the envy of the world,” Anastakis said. “That now has all basically gone away, and this is basically a self-imposed economic disaster.

“Trump is going to go down in history for all the horrible things he’s done, but this may be one of the stupidest things he’s done.”

Tariffs don’t help, he said. But the damage has already been done.

“There’s a sense of betrayal. This is about trust, and we’ve been allies and friends for a long time,” he said. “The tone that (Canadian Prime Minister Justin) Trudeau and (Premier Doug) Ford used is one of significant defiance.”

Anastakis said going forward, Canadians may look for trade partner alternatives elsewhere.

“I’ve been watching this for a long time, and this is the first time I’ve seen this real passion by Canadian leaders.”