- More than 1,100 economists, including 14 Nobel laureates, urged President Donald Trump to reverse course on recent trade measures.
- The economists drew comparisons between the current tariff measures under Trump and the Smoot-Hawley Act in 1930.
- The Smoot-Hawley tariffs helped contribute to the economic hardships of the Great Depression.
Over 1,100 leading economists sent a letter to President Donald Trump urging the president to reverse course on recent trade tactics — lest the US repeat one of the biggest mistakes of the Great Depression.
The letter, organized by the conservative-leaning National Taxpayers Union, warned that recent tariffs and trade protectionism were harmful to the economy. The economists cited a 1930 letter that warned Congress against passing the Smoot-Hawley Act, a large package of tariffs that many studies cite as a major reason for the depth of the Great Depression.
“Congress did not take economists’ advice in 1930, and Americans across the country paid the price,” the letter says. “The undersigned economists and teachers of economics strongly urge you not to repeat that mistake. Much has changed since 1930 — for example, trade is now significantly more important to our economy — but the fundamental economic principles as explained at the time have not.”
The Smoot-Hawley tariffs, much like Trump’s measures, were designed as protection for US industries. But they ended up making the situation worse.
Included on the new letter are 14 Nobel laureates and economists from across the political spectrum, including former chairs of the Council of Economic Advisers under Presidents Barack Obama, George W. Bush, and Bill Clinton.
The letter also quotes the warnings from the 1930 letter, which warns that tariffs raise prices on consumers, damage industries that rely on trade director or indirectly, hurt the fortunes of American farmers, and lead to retaliatory measures from other countries.
The 1930 letter also painted the tariffs as a threat to national security.
“Finally, we would urge our Government to consider the bitterness which a policy of higher tariffs would inevitably inject into our international relations,” the 80-year-old letter read. “A tariff war does not furnish good soil for the growth of world peace.”
Could this be next for stocks?