Economist Hanke warns Trump tariffs could trigger economic downturn
Economist Steve Hanke has strongly criticised President Donald Trump’s tariff policies, warning they could lead to severe economic consequences reminiscent of the early 1930s.
Hanke drew parallels between current U.S. trade measures and the Smoot-Hawley Tariff Act, which preceded the Great Depression.
He highlighted that Trump’s proposed tariffs could raise input costs for American businesses by $500 billion, calling tariffs “an economic wrecking ball.”
Hanke noted that in 1930, the money supply was contracting, which contributed to the economic slowdown, and the introduction of Smoot-Hawley tariffs further worsened the situation, causing the Dow to lose 83% of its value by 1932.
He warned that the current environment mirrors that period, with the potential for “rough times” ahead if policies do not change.
Hanke criticised the Trump administration’s approach, suggesting advisors underestimate the risks, and described Trump’s dismissal of potential fallout as a “profound disconnect” from historical and monetary realities.
“We’ve seen this movie before... If this doesn’t change, we’re in for a lot of trouble,” he stated.
“The stupidest thing I’ve ever seen in my life,” Hanke concluded, calling the tariffs and warned that the U.S. is “just creating enemies.”
His warnings come amid broader concerns that tariffs could slow economic growth, increase costs for consumers, and exacerbate inflationary pressures.
Several experts have noted that tariffs act like a sales tax on imports, reducing demand and potentially harming the U.S. economy.
The debate continues as policymakers weigh the trade-offs between protecting domestic industries and maintaining open markets.
Hanke’s historical perspective underscores the risks of protectionist policies and the importance of learning from past economic mistakes to avoid a repeat of the 1930s downturn.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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