Following the end of the First World War, American agriculture faced a severe depression as the sudden emergence of strong foreign competition, particularly from Europe, sent farm prices crashing. In 1928, during his presidential campaign, Republican candidate Herbert Hoover promised to adjust tariffs to support farmers, who then constituted 20 percent of the population. Hoover won the election, and early in 1929, Representative Willis C Hawley of the House Ways and Means Committee and Senator Reed Smoot of the Senate Finance Committee began framing a law to readjust tariffs.
This was, by no means, an easy process, as multiple interests were represented by members of Congress and Senators across the country, all seeking to protect local industries. The exercise stretched over two years as representatives traded votes for particular sectors in a process popularly known as “logrolling”. Ultimately, specific duties were imposed on a vast array of goods, and President Hoover approved the law in 1930.
At the time, the global and American economies were already in the throes of the Great Depression. While this downturn resulted primarily from the collapse of the financial sector, trade restrictions added fuel to the fire, particularly since the specific duties placed a heavy burden on consumers as prices collapsed everywhere. As import prices plunged by nearly 50 percent between 1929 and 1932, the effective average tariff rate on dutiable goods surged from 40.1 percent in 1929 to 59.1 percent by 1932; moreover, competing countries retaliated by imposing duties on American goods.
Between 1929 and 1934, global trade fell by 66 percent and industrial production by 32 percent. There was mayhem in the global economy, and Americans suffered heavily, too. Shanty towns, nicknamed ‘Hoovervilles’, sprang up across the US. John Steinbeck’s novel The Grapes of Wrath tells the story of an impoverished Oklahoma family moving to California in search of a living during the Great Depression. Roosevelt was eventually elected President, and Congress’s authority to set individual tariffs was curtailed.
President Trump, in his first term in 2018-19 and more comprehensively in 2025, decided to become Hoover the Second. On the so-called Liberation Day in 2025, he announced sweeping increases in tariffs on goods from all territories. He also expressed a deep animosity towards immigrants. At an internal meeting, he referred to various African nations as “s…tholes”—a statement that aroused the ire of the African Union, which retaliated by stating that the rhetoric hurts shared global values on diversity and human rights.
Individual African countries used stronger language. In Kenya, activist Boniface Mwangi urged Americans to impeach their “narcissist, racist” president, calling him an “embarrassment”. Trump famously called Kim Jong Un of North Korea “Rocket Man” and threatened to wipe that country off the map, a threat we heard repeated recently when he threatened to destroy the ancient civilisation of Iran. Kim retaliated, threatening to “tame the mentally deranged US dotard with fire”.
Furthermore, Indian immigrants were placed in shackles and flown to India in military aircraft—an act against which the Indian foreign ministry “strongly registered” its concern. In his use of inappropriate language and his implementation of strong-arm actions, Trump certainly left Hoover far behind.
While imposing tariffs on Liberation Day, Trump naively ignored the fact that global value chains now dominate production. When he imposed tariffs on steel and aluminium in his first term, downstream US industries suffered significantly, resulting in a $3.5 billion loss in 2021. There was no evidence of American manufacturers ‘reshoring’ their units following the 2025 tariffs. American manufacturing construction spending actually declined by 21 percent from mid-2024, bringing down industrial output; if there was any growth, it was primarily in AI data centres and power infrastructure.
The 2018-19 tariff increases had resulted in a spate of retaliatory duties, the brunt of which was borne by American agriculture. Between mid-2018 and the end of 2019, agricultural exports declined by $27 billion, with China accounting for 95 percent of the loss in export value. The Penn Wharton Budget Model estimates that the Liberation Day tariffs will reduce long-run GDP by 6 percent and lower US wages by 5 percent. According to this study, a middle-income household would face a lifetime loss of $22,000.
Additionally, the 2025 tariffs pushed up inflation and poverty. Because tariffs act as indirect taxes that reduce real household purchasing power, they drove the cost of living significantly higher. The Budget Lab estimated that the 2025 tariffs alone would increase the number of Americans living in poverty by between 6.5 lakh and 8.75 lakh, including up to 3.75 lakh children.
Fortunately, the US Supreme Court, in Learning Resources vs Trump, struck down the tariffs imposed under the International Emergency Economic Powers Act, ruling that the statute did not empower the President to set tariffs unilaterally. This angered Trump, who turned to Section 122 of the Trade Act of 1974 and imposed 10 percent tariffs ad valorem on all countries.
The US Court of International Trade struck down this action, but the tariffs continue to be collected on the strength of a stay obtained from the US Court of Appeals for the Federal Circuit. However, these tariffs can remain in place only for 150 days, until July 24. He has also initiated action under Section 301, but this can be used only for individual tariffs and involves a long-drawn-out process.
Meanwhile, dissatisfied with the outcome, Trump turned his attention to Iran, instigated by Benjamin Netanyahu of Israel. He assumed that a war would end in days with the assassination of Ayatollah Khamenei. However, Iran had its own plans. Today, even after temporary ceasefires and a framework for a peace agreement, the world holds its breath as the Strait of Hormuz opens one day and then closes the next, although sanctions on Iran’s oil sales have been lifted for a month.
Trump desires to establish his place in history as an unconquerable President who stamped his supremacy over the world. Instead, he risks being recorded as a blundering US leader who caused untold harm to global economic stability and international security. His legacy may ultimately be defined not by his perceived strength, but by the systemic damage his policies inflicted upon the prosperity of his own citizens and the fragile interconnectedness of the modern global order. Hopefully, there will be no ‘Trumpvilles’ springing up by the end of his term.
K M Chandrasekhar | Former Cabinet Secretary
(Views are personal)
(kmchandrasekhar@gmail.com)