Nearly a century ago, the United States passed a notorious tariff law that plunged the world into a trade war and prolonged the Great Depression. Now, President Donald Trump seems quite convinced that history is not only a guide but also optional.
This week, Trump plans to impose so-called “reciprocal tariffs” in what he has flamboyantly dubbed “Liberation Day. ” This economic fireworks display is designed to cover more trade than the infamous Smoot-Hawley tariffs of 1930. Once a textbook warning against protectionism, that policy is now reimagined as a blueprint for national glory.
Trump’s vision is nothing short of a scorched-earth rewrite of the global trading system—ironically, the very same system the United States helped build from the ashes of the Great Depression. Convinced that Americans have been played-for fools for the last 40 years, he’s tearing it down, one tariff at a time.
In a weekend interview with NBC, Trump declared, “The world has been robbing the United States blind. And all we’ve done is be nice.” Now, it seems, niceties are off the table.
Behind closed doors, European leaders are preparing for impact. Christine Lagarde, President of the European Central Bank, reportedly warned EU heads in Brussels to brace for the “worst-case scenario”—a hostile United States dragging the world into a destructive economic showdown.
In Canada, once so economically entangled with its southern neighbour that it practically breathed in sync, policymakers are now talking like they have a long-term partner who has dumped them. “The old relationship with the US is over,” declared Prime Minister Mark Carney. “The future lies elsewhere.”
Even American businesses are split. The US Chamber of Commerce, usually the White House’s corporate cheerleader, warns that small firms will be collateral damage. Elon Musk, the ever-voluble CEO of Tesla and a one-time Trump ally, has urged caution. Yet some steelmakers and nostalgic brands welcome the tariffs as if economic nationalism were a new IPO.
Trump is building a tariff wall around the world’s largest economy, which is meant to deliver on a campaign promise and fund tax cuts. Regardless of the outcome, it will etch his name into economic history, possibly next to Smoot and Hawley… only bolder and with better branding.
Douglas Irwin, an economic historian at Dartmouth, predicts the Trump tariffs could dwarf those of 1930. “Imports now account for a much bigger slice of GDP than they did back then,” he noted. And that slice—14% of GDP today, three times the 1930s level—is no small biscuit.
Bloomberg Economics estimates that if Trump follows through on the full suite of tariffs, it could shave 4% off US GDP and raise prices by 2.5% over two to three years—roughly equivalent to losing Pennsylvania’s economic output. Not bad for a Tuesday.
Meanwhile, America’s trading partners are dusting off their own tariff playbooks. Retaliation is expected—and likely. We’ve seen this movie before. In 1930, Italy’s car clubs boycotted American autos. In 2025, Canadian shops are already clearing shelves of Tennessee whiskey.
And let’s not forget the geopolitical comedy of errors. Trump has lashed out at everything from Europe’s VAT system to South Korea’s safety regulations, treating them not as technicalities but as national insults. His advisers swear these are temporary irritants in a broader plan for “economic transformation.”
Still, Wall Street isn’t laughing. The S&P 500 entered correction territory, and growth forecasts have been revised downward by Goldman Sachs and JPMorgan. Investors are asking whether the real risk isn’t the tariffs themselves but the erratic economic leadership behind them.
In an irony that won’t be lost on economic historians, Trump’s protectionist crusade may undermine the very strength he claims to defend. Many countries have tried to grow behind high tariff walls, but it doesn’t work.
The world may have once looked to America for economic leadership. Now, it’s looking elsewhere, perhaps ordering its jam from somewhere with fewer geopolitical strings attached.