Boston College economics professor Brian Bethune has asserted that U.S. President Donald Trump's tariff policies represent a monumental disruption to the U.S. economy, rivaling the effects of the 1930 Smoot-Hawley Tariff Act. This historic act is widely regarded as a catalyst for the Great Depression, as it prompted nations to impose trade barriers that precipitated a sharp decline in global economic activity.
In response to the escalating trade tensions, Canada has declared retaliatory tariffs, while Mexico is preparing to introduce its own countermeasures. Bethune has expressed grave concerns about the implications of these tariffs, predicting significant disruptions to supply chains and identifying potential hurdles for U.S.
manufacturers operating on the global stage. The immediate ramifications of these tariffs are anticipated to stifle economic growth while simultaneously driving inflation rates higher, potentially leading to a scenario of 'stagflation.' This economic condition, which the U.S. endured during the 1970s and 1980s, is characterized by sluggish economic growth coupled with elevated inflation levels.
In light of these concerns, Bethune recommends that the Federal Reserve should contemplate reducing interest rates as a possible strategy to mitigate the adverse effects generated by the tariff framework..