Commentary: Could Trump's tarrifs set off a similar spiral to The Great Depression?

“While the stock market may be overreacting slightly - given Trump’s history of using tariffs as a bargaining tool - history has shown that trade wars come with long-term economic pain. The Great Depression was exacerbated by an international tariff war, with global trade plummeting by 66% between 1929 and 1933, crippling American businesses and driving unemployment to catastrophic levels.

“Trump’s tariffs, combined with retaliatory measures from China and Canada, risk setting off a similar spiral. Markets might hope for a short-term climbdown, but tariffs aren’t just bargaining chips; they distort supply chains, raise consumer prices, and weaken global confidence. The idea that the US can win a trade war is misguided - history suggests everyone loses, just at different speeds.

“Moreover, China and Canada aren’t responding in isolation; they are signalling to the rest of the world that the US is no longer a reliable trade partner. If allies and competitors alike begin decoupling from US markets, the damage could be far deeper than investors currently anticipate. The real question is not how the stock market reacts today, but whether the world is inching toward a permanently fractured trading system and a recession.”