Is it possible this new trade war will lead to another economic depression?
The impact of the latest tariffs on the economy remains uncertain. However, economists say that the current economy is in a better position than it was during the Great Depression. While it's unlikely that the new tariffs will trigger a depression, they could lead to an economic slowdown with higher prices resulting in consumers cutting back on spending, according to Clarke. Witcher also said the tariffs could impact jobs.
"The Great Depression was a singular event in our history, so I think it is unlikely that Trump's 25% tariffs lead to an economic calamity on that scale," Witcher said. "But a 25% tariff will definitely make us poorer. It will not save many jobs and will likely result in net job losses in related sectors."
During his address to Congress on Tuesday night, Trump said that more tariffs, including reciprocal tariffs, would go into effect next month on April 2.
"Whatever they tariff us, other countries, we will tariff them," he said. "Whatever they tax us, we will tax them. If they do non monetary tariffs to keep us out of their market, then we will do non monetary barriers to keep them out of our market."
The tariffs being implemented by Trump are historically high, similar to tariffs imposed during the Great Depression, and the tariffs could get higher, Richardson says. But the circumstances differ significantly, particularly regarding who is imposing them.
"The tariffs of the 1930s were imposed by the U.S. Congress," Richardson says. "This is Trump's signature move and he is personally going to bear probably almost all the blame if things go wrong."
The economists did not provide any positive outcomes regarding the tariffs. As one economist put it, tariffs are like a game of chicken, where each side waits to see who will back down first. When one country imposes tariffs, the other retaliates, creating a cycle of escalating measures."The people imposing the tariffs first, which in this case is the U.S., were kind of saying, 'Yeah. We understand this could go really wrong, and everyone could suffer. But we'd rather have everyone suffer than the current state of the world. So, if you don't want everyone to suffer, if you don't want to suffer, you got to give in to us.' " Richardson says.
Witcher, Richardson and Clarke all agree that the new tariffs could have negative implications for the economy.
"Any way you look at it, a 25% tariff is bad economic policy," Witcher says. "There are very few winners and many, many losers from such a policy. Combined with other factors, such as declining consumer confidence, interest rate increases, etc., they could contribute to a recession."