Marco Levytsky, Editorial Writer
As the renowned philosopher George Santayana once noted: “Those who do not learn from history are doomed to repeat it.” This quote has never been more relevant than today as we observe America committing the very same egregious mistakes it made almost a century ago.
The 1930s were marked by a global economic crisis, the rise of authoritarian dictatorships, the revanchism of former empires out to regain “lost” territories, and the failed policy of appeasing aggressor states, which ultimately led to the deadliest conflict in human history.
In the United States, the governing Republican Party embraced a policy of isolationism, as exemplified by its decision to keep America out of international organizations like the League of Nations, whose overriding mission was to promote global peace and security. This was fueled by a movement called “America First,” whose members often sympathized with dictatorial regimes. When faced with the onset of the Great Depression following the stock market crash of 1929, what did the ruling Republicans do in an effort to make things better? They started a global trade war by raising tariffs on an unprecedented scale against America’s major trading partners. And, remarkably, that’s precisely what US President Donald Trump – who is forever reminding Americans that “tariff” is his favourite word — did on April 2.
On “Liberation Day,” as he called it, Trump imposed additional tariffs on nearly every country in the world. Not even two tiny, remote Antarctic outposts populated solely by penguins and seals escaped his wrath. The Heard and McDonald Islands – located 4,000 kilometres south-west of Australia and accessible only by seven-day boat trip from Perth — haven't been visited by humans in almost a decade. Only Cuba, Belarus, North Korea and Russia were spared new tariffs, either because of existing sanctions or existing high tariffs. US sanctions on Moscow already “preclude any meaningful trade,” explained White House press secretary Karoline Leavitt. But Ukraine was not spared. It was hit with a 10% levy on all goods, as well as a 25% tariff on steel exports to the US. This despite the fact that Ukraine’s exports to the US amounted to less than $900 million last year, while Russia’s totalled $3 billion.
The Smoot–Hawley Tariff Act of 1930, as any student of that historical period knows, was an abject failure. Intended to bolster domestic employment and manufacturing, the tariffs instead deepened the Depression because America’s trading partners retaliated with tariffs of their own, leading to US exports and global trade plummeting. US imports decreased 66% from $4.4 billion (1929) to $1.5 billion (1933), and exports decreased 61% from $5.4 billion to $2.1 billion. US gross national product fell from $103.1 billion in 1929 to $75.8 billion in 1931 and bottomed out at $55.6 billion in 1933. Imports from Europe decreased from a 1929 high of $1.3 billion, to $390 million in 1932. US exports to Europe decreased from $2.3 billion in 1929 to $784 million in 1932. Overall, world trade decreased by some 66% between 1929 and 1934. US unemployment was 8% in 1930 when the Smoot–Hawley Act was passed but jumped to 16% in 1931 and to 25% in 1932–1933. The Great Depression was already in motion before Smoot-Hawley, but the tariff worsened the crisis by shrinking global trade, devastating US agricultural incomes, and reducing employment in export-dependent industries.
Trump’s decision to hike tariffs to the highest level since Smoot-Hartley sent shock waves through the global economy, hammering financial markets, and adding to inflationary concerns. The US stock market lost almost $5 trillion in aggregate value in the two days following Trump's tariff announcements. The Dow Jones Industrial Average dropped 2,231.07 points, or 5.5%, to 38,314.86 on April 4, the biggest decline since June 2020 during the Covid-19 pandemic. This follows a 1,679-point decline on April 3 and marks the first time ever that it has shed more than 1,500 points on back-to-back days. The S&P 500 nosedived 5.97% to 5,074.08, the biggest decline since March 2020. The Nasdaq Composite dropped 5.8%, to 15,587.79. This follows a nearly 6% drop on April 3, and a 22% decline overall since a December 2024 record high.
As in 1930, foreign leaders condemned the tariffs and vowed retaliatory measures of their own. EU chief Ursula von der Leyen made clear that Europe was “prepared to respond” to the tariffs, calling them a “major blow to the world economy.” She added that Brussels was “preparing for further countermeasures,” which France and Germany both suggested could include targeting US tech firms with taxes. French government spokeswoman Sophie Primas went further, saying the EU response would also “attack online services,” although she stressed the retaliation was still being negotiated among member states. The bloc's response might extend to limiting “access to our procurement contracts,” Primas said. “Everything is on the table,” German Economy Minister Robert Habeck said adding “the big tech companies have an incredible dominance in Europe and are largely exempt from European taxes. China said it will impose reciprocal 34% tariffs on all imports from the United States starting April 10.
Canadian Prime Minister Mark Carney imposed 25% tariffs on US-made automobiles entering Canada in response to Trump’s new 25% tariffs on foreign (including Canadian-made) cars entering the US. Carney refrained from imposing broader retaliatory levies, however, as Trump added no new levies on Canadian steel and aluminum beyond those he introduced last month.
The one significant difference between Trump’s global tariffs and those created by the Smoot–Hawley Act is that, in the case of the latter, the tariffs were the product of legislation enacted pursuant to Congress’s Constitutional jurisdiction to levy tariffs, while Trump’s tariffs sidestep Congress altogether and are imposed by Executive Order under the International Emergency Economic Powers Act, a little-known law passed nearly 50 years ago. It’s the first time a president has ever used the law to impose tariffs, although past administrations have repeatedly used the measure to enact sanctions.
Congress needs to reassert control over its tariff jurisdiction and provide the checks and balances against autocratic rule that the founding fathers tasked it with. At present, Republicans control both houses and slavishly follow all of Trump’s demands. But at least some are starting to come to their senses. Four Republican senators joined Senate Democrats in a resolution to oppose Trump’s tariffs against Canada, which passed by a vote of 51-48 on April 3. However, the resolution is not expected to pass the House of Representatives, where the Republicans remain unflinchingly subservient to Trump. However, as the world economy and the US economy continue their downward spiral, even Trump loyalists will have to face the inevitable conclusion. Starting a global tariff war was just plain stupid in 1930. Starting another in 2025, knowing full well how such wars end, is immeasurably dumber still.
The post History repeats itself. Global tariffs didn’t work in 1930, and they won’t work in 2025 appeared first on New Pathway Ukrainian News | Новий Шлях Українські Вісті.