Odaily News Brian Bethune, an economics professor at Boston College, said Trump's tariff policy is the biggest shock to the U.S. economy since the Smoot-Hawley Tariff Act of 1930. Economists generally believe that the act exacerbated the Great Depression by stimulating countries to build trade barriers, leading to a sharp drop in global economic activity. In response to the Trump administration's move, Canada has announced retaliatory tariffs, and Mexico said it will announce countermeasures on Sunday. Bethune warned that the new tariffs will disrupt supply chains and put American manufacturers operating across borders in trouble.
The direct impact of the new tariffs will be to suppress growth and push up inflation, creating a "stagflation effect". The United States experienced stagflation in the 1970s and 1980s, when economic stagnation and high inflation coexisted. Bethune suggested that the Federal Reserve should consider cutting interest rates to deal with the current situation.