Renowned Economist Warns Trump's Tariffs Could Repeat 'Devastating History'

In an interview released on Wednesday, renowned economist Thomas Sowell commented on President Donald Trump's tariffs, warning that broad tariffs could spark a trade war and repeat the "devastating history" of trade policies that exacerbated the Great Depression.

The Hoover Institution shared an excerpt from the interview, which was recorded the day before, featuring Sowell, a senior fellow in public policy at the institution. In the discussion, the prominent conservative economist expressed it was "painful to see" the administration echo the "ruinous decision" made in the 1920s.

Sowell pointed to the Smoot-Hawley tariffs, which were introduced in 1929 and 1930 as a way to shield American industries from foreign competition during the early days of the Great Depression. However, retaliation from other countries led to a sharp decline in global trade, a factor economists now widely believe worsened the Depression.

He added that while Trump's tariffs could be effective if used as short-term, targeted measures to achieve specific goals, leaving them in place for the long term could trigger a "devastating history" of a global trade war, causing uncertainty that might lead consumers and investors to pull back.

"It's painful to see what a ruinous decision from back in the 1920s being repeated. Now insofar as he's using these tariffs to get various strategic things settled and that he's satisfied with that," Sowell said, "but if you set off a worldwide trade war, that has a devastating history. Everybody loses, because everybody follows suit, and all that happens is you get a great reduction in international trade."

Sowell further explained that after the Smoot-Hawley tariffs were implemented, President Franklin D. Roosevelt sought to revive the economy through various policy experiments. While such an approach can work within a predictable, rules-based system, Sowell cautioned that arbitrary and unilateral actions can generate uncertainty, stifling economic activity when there is no dependable framework in place.

"It's disturbing in another sense. Franklin D. Roosevelt, when he was president in the 1930s, said that you have to try things, and if they don't work, then you admit it, you abandon that, and you go on to something else, and you try that until you come across something that does work," Sowell said.

"Now, that's not a bad approach if you are operating within a known system of rules. If you are the one who's making the rules, then all the other people have no idea what you're going to do next. And that is a formula for having people hang on to their money until they figure out what you're going to do, and when a lot of people hang on to their money, you can get results such as you got during the Great Depression of the 1930s.", He added.

"So if this is just a set of short-run ploys for various limited objectives, limited in time, fine, maybe. But if this is going to be the policy for four long years, that you're going to try this, you're going to try that and you're going to try something else, a lot of people are going to wait," Sowell explained.

"I think what happened in the stock market recently when things came down substantially for quite a while," he added, "and I know that various people are holding on to their money before they do anything because they don't know where this is going to lead."

At the age of 94, Sowell retired from writing his syndicated column in 2016, at 86 years old. Throughout his career, conservatives and libertarians have advocated for him to be awarded the Presidential Medal of Freedom for his contributions to economics and public policy.

The Hoover Institution's video highlighted that the complete interview with Thomas Sowell, part of the "Uncommon Knowledge with Peter Robinson" series, will be released on April 15.