Another misconception is that the Smoot-Hawley law eliminated foreign trade. It did not. Foreign trade only dropped to 2 percent of GNP at the depths of the depression. It never totally stopped. Another theory must also be examined when evaluating the effect of the Smoot-Hawley law.
Some people contend the raised tariffs harmed Europe.
Again the facts do not support the myth. Long before tariffs were raised, forces were working to contract the European economy. The skyrocketing American stock market attracted investment money that was previously being invested in Europe. Americans were taking advantage of the rampaging bull market at home and curtailed their investments in Europe. Loans to Europe also fell dramatically before the depression ever started.