In this Tutor2u Economics video, we dive into the strategic world of trade wars with a clear and concise look at Tit-for-Tat Tariffs — a concept that combines real-world trade policy with the powerful tools of game theory.

🔁 What happens when one country slaps tariffs on another?

⚠️ How do countries retaliate — and what are the consequences?

🤝 Could global cooperation be better for everyone?

We explore:

The Tit-for-Tat strategy in international trade — “You tariff me, I tariff you”

How game theory and the Prisoner's Dilemma explain these actions

Historical case study: the Smoot-Hawley Tariff Act (1930) and its catastrophic global effects

The economic costs of retaliation, including higher prices, disrupted supply chains, and a collapse in global trade

With real-world context and powerful economic analysis, this is perfect revision for students aiming for top grades in their economics exams.

The Smoot-Hawley Tariff Act, also known as the Tariff Act of 1930, was a law signed by President Herbert Hoover on June 17, 1930, that raised import tariffs on over 20,000 goods in an attempt to protect American production and jobs during the Great Depression.

The law was named after Senator Reed Smoot of Utah and Representative Willis Hawley of Oregon, who sponsored the bill.

The tariffs imposed by the Smoot-Hawley Act were some of the highest in U.S. history, with average tariff rates increasing by around 40-60%.

However, the act is generally considered to have been a failure, as it incited a global trade war and worsened the economic crisis it was meant to address.

The act is often cited as an example of the dangers of protectionist trade policies, and many economists believe it contributed to the length and severity of the Great Depression.