The Tariff Bomb: Why Trump’s Trade War Could Hit Harder Than the Great Depression
The last time tariffs surged like this, we got the Great Depression.
Now Trump’s launching the biggest wave of tariffs since Smoot-Hawley—but in a hyper-globalized world.
It's an total economic reset.
And it could hit harder than 1930 🧵👇
Trump’s new tariffs go beyond “negotiation tactics.”
They’re policy now.
A 10% blanket rate was just the beginning.
Vietnam, Cambodia, and others got hit with rates as high as 49%.
Markets cracked as the illusion of short-term posturing faded.
In 1930, Smoot-Hawley raised tariffs to 60%.
World trade collapsed. The Depression deepened.
Today’s tariffs may look smaller.
But the economic impact could be much worse—because supply chains are tightly wired and trade makes up 25%+ of U.S. GDP.
Smoot-Hawley turned a severe recession into a global depression by triggering a cascade of protectionism.
The Great Depression officially began with the stock market crash in October 1929.
Smoot-Hawley was signed into law in June 1930, after the downturn had already begun.
It raised U.S. tariffs on over 20,000 imported goods—some by more than 40%.
Dozens of countries retaliated with their own tariffs, leading to a collapse in global trade.
Impact:
• U.S. exports fell by over 60% between 1929 and 1933.
• Global trade shrank dramatically.
• Farmers and industrial exporters in the U.S. were crushed.
• Economic nationalism surged worldwide, further isolating economies.
🔻 Smoot-Hawley (1930):
• Average tariff rate: raised from ~38% to ~60% on certain imports.
• Applied to 20,000+ products, mostly agriculture and light industry.
• U.S. trade made up 5% of GDP at the time.
• Global supply chains barely existed.
• Retaliation came from 25+ countries, collapsing world trade.
🔺 Trump’s 2025 Tariff Plan:
• Blanket 10% tariffs on all imports, with 54%+ on key countries like Vietnam, Cambodia, China.
• Today, trade is ~25% of U.S. GDP.
• Global supply chains are deeply integrated (semiconductors, autos, energy).
• Businesses operate on just-in-time logistics—tariff shocks break that system.
• Tariffs now target entire economies, not just categories of goods.
However, unlike the 1930s, modern trade is instant, complex, and digital.
Reverse it, and you don’t just slow economies.
You freeze capital, cancel freight, shut factories.
Global supply chain gets disrupted.
Back then, Trump’s tariffs nudged rates from 1.5% to 3%.
This time, they’re blowing past Great Depression levels.
Even Elon Musk is slamming the tariffs, sharing anti-tariff videos, and clashing with Trump’s trade chief.
If Musk exits the administration (DOGE), expect defense stocks to rally as cooler heads step in.
But it’ll also confirm this tariff wave is not just posturing.
What does well in a deflationary spiral?
📈 Bonds.
📈 Safe cash.
📉 Not equities.
📉 Not commodities.
Trump is openly tweeting about driving stocks down to get rates down.
He wants bonds up, and they’re going there.
50% pop for the Great Financial Crisis
50% pop for the European crisis of the early 2010s
50% rally in late 2019/early 2020.
TLT should be back to $120, if not higher, if and when people believe that globalization is ending, a major worldwide recession looms, and that equities will be in a bear market for a while.
In 1930, they underestimated Smoot-Hawley.
Until it was too late.
We’re making that mistake again.
This time the stakes are bigger, the damage spreads faster, and the feedback loops are deeper.