Trump’s claim that low tariffs caused the Great Depression is false

On Wednesday, President Donald Trump announced a new round of global tariffs, instituting a minimum 10% levy on goods imported from countries around the world, which he said he hopes will strengthen the U.S. economy and remedy what he calls “unfair trade practices.”

In his remarks on Wednesday, Trump said the Great Depression “would have never happened” if the U.S. maintained a strong tariff policy at the time. The government later “tried to bring back tariffs to save our country, but it was gone,” he added.

However, those statements are untrue, said Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research. 

“We had not ended tariffs before the Great Depression,” he said. “There was a modest lowering, and that occurred decades earlier.”

Congress did pass the Smoot-Hawley Tariff Act in 1930, which increased tariffs to try to boost federal revenue and end the Depression, but historians and economists widely agree the act had the opposite effect: It deepened the rout and raised prices.

“I have literally never heard anyone suggest [a lack of tariffs caused the Depression] and can’t even imagine how it would have worked,” Baker said.

The White House did not respond to a request for comment.

Historians point to a number of contributing factors that led to the Great Depression. Those include the stock market crashing in 1929 due to factors like overproduction in certain industries following World War I and monetary policy aimed at curbing market speculation, according to a Federal Reserve historical analysis. 

The Fed’s efforts to tame investor speculation meant fewer consumers were borrowing money, which led to a decrease in economic activity.

Leading up to the Depression, tariffs were relatively low, Baker said. The U.S. had begun collecting federal income taxes in 1913 to offset its reliance on tariffs, which had previously accounted for up to 90% of federal revenue, according to Douglas Irwin, a Dartmouth College economist.

With federal income tax in play, tariffs made up less than 20% of federal revenue by 1930, according to the Council of Economic Advisers during President Joe Biden’s administration.

When the Senate passed the Smoot-Hawley Tariff Act in 1930, the U.S. placed tariffs on thousands of imported goods in an effort to support American farmers struggling to compete after European agricultural production recovered following the first World War.

Several earlier tariff acts were focused on agriculture and helping American farmers, but Smoot-Hawley took things a step further and ultimately raised tariffs in “all sectors of the economy,” according to the State Department’s Office of the Historian.

However, the duties led to a trade war as countries responded by raising their own tariffs on the U.S., ultimately freezing international trade, the Senate Historical Office says.

Global trade was soon upended and the Depression worsened as prices increased on essentials like food.

“Just about every economist agrees that the Smoot-Hawley tariffs in 1930 made the Depression worse,” Baker said. Even at the time, experts urged President Herbert Hoover not to sign the Smoot-Hawley Tariff Act into law, with over 1,000 economists signing a petition imploring him not to sign. But Hoover signed it anyway.

Fast-forward to 2025. While experts say the U.S. economy is better positioned than it was 100 years ago, Trump’s tariffs are already threatening future growth and “hugely increase the risk of a recession,” Baker said.

Tariffs can contribute to a recession in a number of ways, Baker said. First, they can function like an additional tax on consumers. “This is money directly out of people’s pockets, leaving them with less to spend,” he said.

In addition to consumer stress and uncertainty, businesses may pull back on investments until they have a clearer picture of the tariffs’ impact and how long they will remain in place, Baker said.

“Many people pulled forward purchases of big-ticket items like cars and appliances to beat the tariffs,” Baker added. He expects this type of spending to slow “since they are not about to make the purchases again.”

Further, “this policy is not likely to have many winners,” Baker said of Trump’s tariffs.

“There will always be some businesses that benefit from trade barriers, but these will be a minority,” he said. Companies that don’t work with many imported parts may get through this period with minimal impact, but that’s “a relatively small group,” Baker said.

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