The Announcement and Initial Reactions

Washington D.C. — President Donald Trump unveiled a new set of global tariffs Wednesday,imposing a minimum 10% levy on imported goods from nations worldwide. The administration asserts these tariffs aim to bolster the U.S. economy and rectify what it describes as unfair trade practices.

During his address, Mr. Trump stated that the Great Depression would have never happened had the U.S. maintained a robust tariff policy. He further commented that subsequent attempts to reinstate tariffs to salvage the nation were unsuccessful because it was gone.

Economists Challenge the President’s Claims

However, these assertions are facing strong pushback from economic experts. Dean Baker, a senior economist and co-founder of the Center for Economic and Policy Research, directly refuted the president’s historical account.

we had not ended tariffs before the Great Depression. There was a modest lowering, and that occurred decades earlier.
Dean Baker, Center for Economic and Policy Research

Baker’s statement underscores a critical point: tariffs were indeed in place before and during the onset of the great Depression. The historical record indicates a more nuanced reality than the president presented.

The Smoot-Hawley Tariff Act: A Deeper Dive

In 1930, Congress enacted the Smoot-Hawley Tariff Act, which increased tariffs wiht the stated goal of boosting federal revenue and ending the Depression. However, historical consensus among economists and historians suggests the act backfired, exacerbating the economic crisis and driving up prices.

The Act aimed to protect American industries, particularly agriculture, from foreign competition. Though, the consequences were far-reaching and largely negative.

I have literally never heard anyone suggest [a lack of tariffs caused the Depression] and can’t even imagine how it would have worked.
Dean Baker, Center for Economic and Policy Research

This perspective highlights the unconventional nature of the president’s claim, which deviates substantially from established economic thought.

The Real Culprits: Unraveling the Causes of the Great Depression

Historians attribute the Great Depression to a confluence of factors, including:

• The stock market crash of 1929, fueled by overproduction in certain sectors following World War I.
• Monetary policy aimed at curbing market speculation, which inadvertently reduced consumer borrowing and economic activity.

A Federal Reserve historical analysis supports this multifaceted view, emphasizing the role of monetary policy in the economic downturn.

Prior to the Depression, tariffs were relatively low. The introduction of federal income taxes in 1913 gradually reduced the government’s reliance on tariffs, which had previously constituted up to 90% of federal revenue, according to Dartmouth College economist Douglas Irwin.

by 1930,tariffs accounted for less than 20% of federal revenue,according to the Council of Economic Advisers during President Joe Biden’s administration.

Smoot-Hawley’s Impact: A Trade War Erupts

the smoot-Hawley Tariff Act placed tariffs on thousands of imported goods, intending to support american farmers struggling after the resurgence of European agricultural production post-World War I.

While earlier tariff acts focused primarily on agriculture, Smoot-Hawley broadened the scope to encompass all sectors of the economy, according to the State Department’s Office of the Historian.

this sweeping approach triggered a trade war, as other nations retaliated by imposing their own tariffs on U.S.goods. The Senate Historical Office notes that this ultimately froze international trade, exacerbating the Depression and increasing prices on essential goods.

The consequences were dire, leading to a important disruption in global trade.

Just about every economist agrees that the Smoot-Hawley tariffs in 1930 made the Depression worse.
Dean Baker,Center for Economic and Policy Research

Even at the time,over 1,000 economists signed a petition urging President Herbert Hoover to veto the Smoot-Hawley Tariff Act,but he ultimately signed it into law.

Present-Day Concerns: Echoes of the Past?

Fast forward to 2025. While experts acknowledge that the U.S. economy is better positioned than it was a century ago, concerns are mounting that Trump’s tariffs could jeopardize future growth and significantly increase the risk of a recession.

hugely increase the risk of a recession,
Dean Baker, Center for Economic and Policy Research

The Economic Fallout: Who Bears the Brunt?

Tariffs can contribute to a recession through several channels, according to Baker. Primarily, they act as an additional tax on consumers, reducing their disposable income.

This is money directly out of people’s pockets, leaving them with less to spend.
Dean Baker, Center for Economic and Policy Research

Beyond consumer impact, businesses may delay investments due to uncertainty surrounding the tariffs’ long-term effects.

Some consumers may have accelerated purchases of major items to avoid the tariffs, but this is expected to slow down.

Many people pulled forward purchases of big-ticket items like cars and appliances to beat the tariffs…[this type of spending will] slow as they are not about to make the purchases again.
Dean Baker, Center for Economic and Policy Research

Baker also suggests that the tariffs are unlikely to produce many winners, with only a small minority of companies benefiting from trade barriers.

this policy is not likely to have many winners…There will always be some businesses that benefit from trade barriers, but these will be a minority.
Dean baker, Center for Economic and Policy Research