Tariffs are set to rise to 18% under Trump
This level was last seen around the Great Depression
Things are about to get absolutely crazy…
A thread 🧵
2/ One Trump policy could negatively impact the economy is tariffs
This looks similar to Herbert Hoover’s trade policies
Which contributed to the onset of the Great Depression
3/ Hoover came to power during a booming market but faced rising wealth inequality - a situation that mirrors today’s conditions
His aggressive tariff policies aimed to address those disparities, but ultimately backfired
4/ The Smoot-Hawley Tariffs back then raised US tariff rates to 20%, triggering a global trade war
Many people believe this policy played a major role in the market crash that followed
5/ Since then, US tariffs have steadily declined
However, Trump’s proposed trade policies could reverse that trend
Potentially raising rates to nearly 18% - a level that could hurt corporate profits and drag down stock prices
6/ For instance, during the Great Depression, profit margins fell from 10–12% to nearly 0%, contributing to a 90% collapse in the US stock market
Tariffs weren’t the only factor behind the crash though - debt, bank failures, and deflation also played roles
Still, trade policies were a significant contributor back then
7/ With corporate profits at all-time highs, a global trade war could reverse that trend
While this might reduce wealth inequality in the long run, falling asset prices could mean considerable short-term financial pain
8/ The effects of tariffs wouldn’t be felt immediately though
Studies of past trade wars show a lag of about a year between implementation and economic consequences
Depending on Trump’s actions, the impact could hit by 2026
9/ This strengthens our conviction in an economic downturn in 2026
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10/ Thanks for reading!
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