The institutional foundations of hegemony: explaining the Reciprocal Trade Agreements Act of 1934

In 1930, Congress approved the highly restrictive Smoot–Hawley tariff, the textbook case of pressure group politics run amok. Four years later, Congress passed the Reciprocal Trade Agreements Act (RTAA), surrendering much of its tariff-making authority to a policy process in which internationalists had increasing influence. While the United States had used reciprocity to expand exports before, the stick of discriminatory treatment took precedence over the carrot of liberalizing concessions. With the transfer of tariff-making authority to the executive, the United States could make credible commitments and thus exploit its market power to liberalize international trade. Despite later modifications, the RTAA set the fundamental institutional framework for trade politics.