Economists sound the alarm on Trump’s latest tax measures. They warn that these policies will backfire and hurt the US economy. Americans could see their cost of living spike by thousands of dollars per year.
Maurice Obstfeld, former chief economist at the International Monetary Fund, says the US plans to raise tariffs on imports from several countries. This move aims to pressure other countries to open up their markets to US goods. But the consequences could be severe.
The new policies echo two major economic lessons from the past 100 years. The first is the 1929 global economic crisis, which started with the stock market crash on “Black Tuesday.” The US economy plummeted, leading to the Great Depression.
Back then, the US Congress passed the “Smoot-Hawley Tariff Act,” raising import taxes by nearly 60%. The goal was to protect US industries, but it had the opposite effect. Other countries retaliated with their own tariffs, and US exports suffered. Businesses closed, and the economy didn’t recover until World War II started in 1939. Experts say Trump’s measures are even more extreme than the Smoot-Hawley Act.
The second lesson comes from the “Nixon Shock” in 1971. President Richard Nixon scrapped the link between the US dollar and gold, causing high inflation worldwide. The US economy was shaken, and its relationships with other countries were strained.
Obstfeld warns that Trump’s 2025 measures follow a similar pattern: doing what seems good for the US without considering the impact on other countries. This approach is not good for international relations.
Economists worldwide caution that repeating past mistakes could lead the US economy into another crisis. They urge policymakers to learn from history and avoid making the same errors.
- Trump’s tax measures could backfire and hurt the US economy
- Americans may face higher cost of living, with thousands of dollars added to their yearly expenses
- Economists warn that these policies echo past mistakes, including the 1929 global economic crisis and the “Nixon Shock” in 1971
- Experts urge policymakers to learn from history and avoid repeating past errors