Leading economists reacted with alarm after President Donald Trump announced sweeping new tariffs on U.S. trading partners, with some projecting potential economic losses of up to $20 trillion.
What Happened: “Monstrously destructive, incoherent, ill-informed tariffs based on fabrications,” economist Justin Wolfers wrote Wednesday on X, calling the move “bigger than Smoot-Hawley” and warning it would “hurt working Americans more than anyone else.” Wolfers referred to the 1930 Smoot-Hawley Tariff Act, signed by former President Herbert Hoover, which raised import duties to protect U.S. farmers and businesses but worsened the Great Depression.
Trump’s “Declaration of Economic Independence,” unveiled Wednesday, establishes a reciprocal tariff structure set at half the rate trading partners impose on American goods, including non-monetary barriers like VAT taxes and subsidies.
China faces tariffs at 34%, followed by Vietnam at 46%, and Sri Lanka at 44%. The new duties take effect on Apr. 9.
Former Treasury Secretary Larry Summers estimated the economic impact could reach “$20 trillion, or well over $200,000 per family of four,” noting that “as the president spoke, the value of all U.S. stocks fell at least 2 to 3 percent or about $1.5 trillion.”
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Why It Matters: Markets reacted swiftly to the announcement. S&P 500 futures dropped 2.5% while Nasdaq 100 futures fell 3.3% in after-hours trading. The Magnificent Seven tech stocks are projected to lose $685 billion in combined market value, with Apple Inc. AAPL facing the largest decline at $221.7 billion.
Economist Peter Schiff, who called the tariffs “history’s biggest political blunder,” warned on X that “a weaker dollar will just make the sting that much more painful” for American consumers. He predicted gold could reach $3,500 this month as investors seek safe havens amid growing economic uncertainty.
Allianz Chief Economic Advisor Mohamed El-Erian noted Trump’s characterization of the tariffs as America’s “turn to prosper” in a new “golden age,” while acknowledging the measures center on “an across the board 10% levy and sector/country overlays.”
Trump framed the move as correcting decades of trade imbalances, stating, “April 2nd, 2025 will forever be remembered as the day American industry was reborn.”
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