Trump’s Smoot-Hawley Revival: Tariff Tantrum Risks Another Depression
President Trump has fired another reckless round in his tariff war with Canada, invoking an obscure and dangerous provision straight from the Smoot-Hawley Act—the very law whose tariffs were a singularly powerful factor in turning the 1929 downturn into the Great Depression. If we didn’t know better, it would look like he’s deliberately trying to recreate the economic disaster of 1930. Trump, of all people, should know full well the history: Smoot-Hawley triggered a cascade of global retaliation that crushed trade, destroyed jobs, and deepened misery for millions. Yet here we are, nearly a century later, with this administration reaching into that same toxic bag of tricks.
Section 338 lets the President hammer countries up to 50% tariffs for discriminating against U.S. commerce. Trump is using it not against genuine adversaries, but to punish Canada for the predictable retaliation against his own 25% duties on motor vehicles and parts. Canadian counter-tariffs, provincial restrictions on U.S. alcohol, and adjustments favoring other nations have already cut U.S. auto exports by 22% and spirits flows dramatically. According to a March 2026 study by economists André Kurmann, Étienne Lalé, and Julien Martin published by the Centre for Economic Policy Research (CEPR), the resulting decline in Canadian tourism has cost between 14,000 and 42,000 jobs in exposed U.S. border markets. Cross-border supply chains are fracturing, American businesses—from auto makers to hospitality—are paying the price in higher costs and uncertainty. The White House complains about dairy and cheese access while American consumers and producers foot the bill for this escalating madness.
This tariff addiction reveals a deeper flaw in treating trade like a zero-sum game where the President plays king. Trump’s crowd will claim this is tough negotiation, but the reality is, this is economically illiterate policy that violates every lesson from the last century. Governments don’t create wealth by erecting barriers and then punishing partners for mirroring the folly—they destroy it through distorted incentives, disruption of supply chains, crony favoritism for protected industries, and violation of the property rights that underpin genuine commerce. Americans are already feeling the pain in jobs, prices, and disrupted supply chains. The only sane path is mutual reduction of barriers, not endless escalation.