President Donald Trump is warning of potential economic fallout if his extensive tariff policy is overturned, hinting at a new Great Depression.
What Happened: Trump voiced his apprehensions in a post on Truth Social, suggesting that a negative verdict on the tariff policy by a “Radical Left Court” could have catastrophic implications for the country’s economy. He underscored the difficulty the U.S. would face in bouncing back from such an economic setback.
"If a Radical Left Court ruled against us at this late date, in an attempt to bring down or disturb the largest amount of money, wealth creation and influence the U.S.A. has ever seen, it would be impossible to ever recover, or pay back, these massive sums of money and honor. It would be 1929 all over again, a GREAT DEPRESSION!" he said in the post.
"There is no way America could recover from such a judicial tragedy, but I know our Court System better than anyone, there is no one in history that has gone through the trials, tribulations and uncertainties such as I, and absolutely terrible, but also amazingly beautiful, things can happen. Our Country deserves SUCCESS AND GREATNESS, NOT TURMOIL, FAILURE, AND DISGRACE," Trump further added.
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The President’s tariffs, introduced on Thursday, have stirred the global trade system. The Dow Jones Industrial Average closed with a 0.5 percent loss in the aftermath of the tariff imposition, and the S&P 500 index also dipped by approximately 0.1 percent.
However, the markets made a comeback on Friday, with the Dow Jones Industrial Average seeing a 0.6 percent increase and the S&P 500 index climbing by 0.8 percent.
The U.S. Court of Appeals for the Federal Circuit is presently examining Trump’s rationale for his tariffs under the International Emergency Economic Powers Act (IEEPA). Earlier this week, former House Speaker Paul Ryan speculated that Trump’s emergency tariff authority could be overruled by the Supreme Court.
While economic historians generally agree that tariffs were not a cause of the Great Depression, some do argue that the Smoot–Hawley Tariff Act signed into law on June 17, 1930, less than nine months after the Wall Street crash of 1929, made the Depression worse.
Why It Matters: The potential reversal of Trump’s tariff policy could have far-reaching implications for the U.S. economy. The President’s warning of a possible depression underscores the gravity of the situation.
The tariffs, which have already caused fluctuations in the stock market, are a contentious issue that could significantly impact global trade.
The outcome of the U.S. Court of Appeals’ review of the tariffs under the IEEPA will be critical in determining the future direction of the U.S. economy.
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Image: Shutterstock/Dennis MacDonald
