Did Tariffs Cause The Great Depression?

The Great Depression of the 1930s was a major economic collapse that affected countries around the world. Many factors caused the downturn, but one controversial element was tariffs. The Smoot-Hawley Tariff Act of 1930 raised U.S. tariffs on over 20,000 imported goods. The goal was to protect American farmers and manufacturers. Instead, other countries retaliated with their own tariffs. Global trade fell sharply, deepening the economic crisis. Many experts believe these protectionist policies made the Depression worse.

Trumps New Tariff Announcements

On April 2, 2025, President Donald Trump announced a new round of tariffs. He called the plan “Liberation Day.” A universal 10% tariff will apply to all imports. Some countries will face higher rates. For example, China will be hit with a 34% tariff. The European Union will face a 20% tariff. These new tariffs will begin on April 9.

On April 7, Trump escalated things further. He threatened a 50% tariff on Chinese imports if China does not remove its retaliatory tariffs. The move sparked concern over a possible trade war and rising costs for U.S. businesses and consumers.

Trump’s Tariff Chart

During his announcement, Trump showed a chart comparing U.S. tariffs with those of other countries. The chart claimed other nations charge the U.S. more. Critics say the chart was misleading. It didn’t show the full picture or account for trade agreements and exemptions.

Actual Tariff Rates by Country

Before the new plan, U.S. average tariffs were low—about 2.2% in 2023. Here’s how other countries compared:

  • China: 3.0%

  • European Union: 2.7%

  • Japan: 1.9%

  • India: 12.0%

  • Brazil: 6.7%

  • Canada: 3.4%

  • Mexico: 3.9%

These numbers show that tariff levels vary widely. Creating “reciprocal” tariffs is more complicated than it seems.

Where Does Tariff Money Go?

Tariff revenue goes into the U.S. Treasury’s general fund. Importers pay the tariffs, but the cost is usually passed to consumers. That means higher prices for many goods. In Trump’s first term, some tariff money went to help U.S. farmers. They had lost business due to other countries’ retaliatory tariffs. The current plan may follow a similar approach.

Feature Image Credit: Creator: JONATHAN ERNST | Credit: REUTERS

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