Trump’s tariff war is reminiscent of the 100-year-old Great Depression!
Pankaj Srivastava April 10,2025
By imposing 104 percent tariff on China, US President Donald Trump has made it clear that he will not back down from the path he has taken. Apart from China, he is also in conflict with other countries. On the other hand, the American public is remembering the horrific scene of about a hundred years ago when a similar tariff war started and the result came in the form of the Great Depression. The public suffered severe poverty and misery. This is the reason why protests are being held against President Trump in many parts of the country.
Tariff means tax imposed on imports. This makes the goods coming from abroad expensive. Trump feels that America is suffering losses due to the imbalance in tariff rates and the goods of countries like China and India are sold at cheaper rates in his country. This affects the business of American companies. Announcing a stop to this alleged looting of America, in early April Trump imposed tariffs of 34% on China, 26% on India, 20% on European Union, 25% on Canada-Mexico, 46% on Vietnam, 37% on Bangladesh and 24% on Japan. In retaliation, China imposed 34% tariff on America, Canada imposed 25%, and Europe imposed 20-25% tariff. Trump got very angry at this and giving a strong message, imposed a tariff of 104% on China. That means if any Chinese product was sold in America for 100 dollars till yesterday, it will now be sold for 204 dollars.
The result will be that the goods of other countries will become expensive in America. This will affect the exports of that country. Decrease in exports means decrease in production, which means there will be less work in factories, the need for workers will decrease. As a result, wages will decrease and there will be layoffs and the purchasing power of people will decrease. In such a situation, the American companies for whose protection Trump is imposing this tariff will no longer have the capacity to buy their products in that country. In this way, America’s exports will also be affected and the same vicious circle will start which has been discussed above.
This apprehension has received the most response in America, because about a hundred years ago, the people there have gone through such horrific circumstances whose memories still scare them. These memories are of the Great Depression of 1929. Which is called the Great Depression. Immediately after Trump’s announcement, there was a huge upheaval in the American stock markets. The American stock market saw a loss of more than 2.4 trillion dollars between 4-7 April. In such a situation, the memory of the economic Great Depression is natural. Especially when the reason for that was to impose tariffs. In fact, in 1930, the government tried to protect farmers and businesses through the Smoot-Hawley Tariff Act. Under this, a twenty percent tariff was imposed. Senators Reed Owen Smoot and Willis Chaitain Hawley had proposed it. Despite the appeal of more than 1,000 economists, President Hoover did not veto it and 25 countries imposed tariffs on American goods in response. This led to a major decline in global trade. This is considered a major reason for the Great Depression.
During the Great Depression, workers were on the streets in America. Jobs were lost on a large scale and factories were closed. People slept hungry under tin roofs. Farmers lost their land and the dreams of the middle class were shattered. 9 thousand banks failed, people’s savings were lost. The condition of 5 million black citizens in America became worse than animals. Corruption, illegal liquor and the hooliganism of the Ku Klux Klan, which spread white terror, had increased. About 3 million people became unemployed in the world. Humanity was crying.
Behind all this was a Tuesday which is known in history as ‘Black Tuesday’. On 24 October 1929 (Black Tuesday), the American stock market crashed.
Investors panic-sold more than 16 million shares, a record at that time. Stock prices fell by an average of 12%. Small investors, big traders, and banks—all jumped into the sell-off.
Black Tuesday was not just a one-day event; it was the result of irresponsible economic policies and greed of the 1920s. It affected the world for decades and laid the foundation for the recession of the 1930s. At the root of all this was the First World War, in which on one side were countries like Germany, Austria, Hungary, Turkey, i.e. the Ottoman Empire, Bulgaria, and on the other side were the Allied powers like England, France, Russia, and the United States. One crore sixty lakh people died in this, including ninety lakh soldiers and seventy lakh civilians. More than two crore soldiers were injured. Initially, production and employment increased due to the World War, which started decreasing as soon as the war ended.
Initially, America made huge profits. But by 1929, the same America became a victim of the Great Depression. There were many reasons for this. In the 1920s, speculation was at its peak in the stock market. People were buying shares by taking loans (margin trading), hoping that the prices would always rise. Shares were being sold at prices many times higher than the real value. There was more production than required in industry and agriculture. Due to low demand, goods remained in warehouses, due to which the profits of companies fell. Banks had given huge loans to investors. When the shares fell, people could not repay the loans, due to which banks started failing. In 1920, wealth was concentrated with a few people. 5% industrialists captured 84% of the profits. The purchasing power of the workers and the middle class was low, due to which demand was decreasing. Europe’s economy was weak after the First World War. America’s loans to Europe were not being recovered, which increased the pressure. Unemployment reached 25%, banks went bankrupt and global trade came to a standstill.
At present, many experts and institutions monitoring economic activities are predicting a recession. JP Morgan increased the probability of a global recession from 40% to 60% after the announcement of tariffs. Goldman Sachs increased the probability of recession from 35% to 45%. Mark Zandi, chief economist of Moody’s Analytics, increased the probability of recession from 15% to 40%. International Monetary Fund (IMF) Managing Director Kristalina Georgieva said that tariffs could reduce global growth by slightly less than 3.3% in 2025.
Although the IMF has not yet predicted a global recession, it warned of ‘significant adverse effects’. Chief US economist Preston Caldwell called the tariffs an ‘economic catastrophe’.
That is, if people are on the streets in America, they feel that a crisis is near, then there is a reason for it. But in India, the Modi government has maintained a surprising silence on this tariff war. No one is able to understand this silence of PM Modi, who calls himself Trump’s best friend, especially when countries like China are responding to Trump in a nutshell. Countries like India are not even involved in this dispute. The Modi government is not even reminding that developing countries like India have got exemption from the World Trade Organization i.e. WTO. Trump’s announcement of 26 percent is breaking this understanding.
However, India is bound to be affected. 18% of India’s exports to the US will be affected. Textile, pharma and auto sectors will suffer. Two lakh jobs were already lost in 2024 and 50 thousand were laid off in the IT sector.
The inflation rate was 6.5% in March 2025 and it can go up to 8-9% in the next six months. On April 9, the value of one dollar became Rs 86.66.
The recession of 1930 starved the workers and farmers and brought the middle class to the streets. But the biggest thing is that extremists and dictators took advantage of the growing discontent. When Hitler in Germany and Mussolini in Italy got the opportunity, they unleashed such an organized storm of hatred that the world reached the era of the Second World War. Is it possible that this tariff war is writing the same story again – inflation, layoffs, unemployment and to cover it up, rulers fuelling the fire of religious fanaticism and fake nationalism. Hopefully the world will learn a lesson from history. The only way to avoid disaster is to not repeat the mistakes of history.
