In February 1932 the UK imposed a General Tariff of 10 per cent ad valorem on imports from foreign countries: this amounted to a clear protectionist device designed to shield the domestic industrial sector from foreign competition. To appreciate fully the nature of the change in the UK's trade policy we need to place it in the wider context of protectionism in the world economy. The UK was the only major industrial country to pursue a unilateral free trade policy in the period 1870–1913. Even by 1925 the limited extent of protection in the UK (see table 6.1) meant that the average tariff level on manufactured goods was only 5 per cent ad valorem: the McKenna Duties (1915) and the Safeguarding of Industries Act (1921) had already protected some of the new industries such as motor cars, chemicals and scientific instruments. In contrast, the average tariff for Continental Europe was 25 per cent (Liepmann, 1938) and for the United States 37 per cent (Bairoch, 1986; Eichengreen, 1989).

The early 1930s saw a sharp rise in tariff levels and quotas throughout the world economy (see figure 6.1), initially induced by falling food and raw material prices in 1928–9 which forced many European countries to raise the level of agricultural protection in order to alleviate distress in the sector. Under the Smoot-Hawley tariff in 1930 the level of American tariff protection also reached unprecedented heights, especially for manufactured goods, with an average duty of 45 to 50 per cent (Eichengreen, 1989).