As President Trump piles on tariffs to other countries goods, it’s interesting to compare this approach to history of such attempts.
Current day politicians seemed to have skipped their U.S. History class in high school. After rhe 1929 stock market crash, Hoover’s approach to the economy was to lower taxes (although by only 1%); tried to protect businesses with the Congressional Smoot-Hawley Tariff Act (versus today’s administrative declarations) which resulted in other countries retaliated with their own tariffs. Sound familiar to today? So what happened?
in 1930 GDP fell 8.5% with unemployment moving up to 8.7%. For 2025, the Atlanta Fed is now forecasting a drop in GDP for Q! of almost 3% (2.8% to be exact). The good news (so far) is the St. Louis Fed recession probability is still less than 1% (but the latest data point was in January). This will probably go higher the longer tariffs stay imposed.
Another comparison of the administration’s shows that both targeted immigrants for deportation (or in Hoover’s case, repatriation). “History never repeats itself but it rhymes,” as attributed to Mark Twain (Samuel Clemens). Of course, from an economic standpoint, stopping immigration and deporting people actually reduces economic growth by fewer people providing labor (agriculture, construction) and their spending money in the economy.
So how well did that work out for Hoover? His administrations actions did not help the Great Depression. But policies of sticking with the gold standard, increasing taxes in 1932, and the Federal Reserve tightened monetary policy exacerbated the problem. During his term, the government went from a $1 billion budget surplus to $6 billion in debt.
So what’s in store for the U.S economy now? Based on history, probably nothing positive with the stock market in steep decline, unemployment rising and inflation still not under control. This is a self-induced economic downturn by the President Trump, who seems to want comparisons to Hoover.