Donald Trump’s ultra-protectionist trade policy could have far-reaching global consequences. History already offers a troubling precedent: in 1930, the Smoot-Hawley Tariff Act worsened the Great Depression, plunging the United States—and the rest of the world—into one of the most severe economic crises of the 20th century. Today, nearly a century later, Trump appears ready to repeat that mistake.
The former president—re-elected in November 2024—has announced a new package of tariffs shaking the foundations of global trade. Beginning April 2, 2025, what he calls “Liberation Day,” the U.S. will impose a 25% tariff on all car and auto part imports. Trump has framed this move as an act of “economic sovereignty” and insists there will be no turning back: “It’s permanent. 100%,” he declared.
But the measure lacks both economic justification and rational logic. What president would abruptly impose tariffs on neighboring countries, strategic allies, and key trading partners? And do so against the advice of the vast majority of economists, who warn of the risk of a global recession?
The automotive industry—Germany’s economic engine and a vital sector for countries like Japan, South Korea, and Mexico—will be among the hardest hit. The new tariffs could trigger a wave of retaliation, fuel inflation, heighten market uncertainty, and discourage investment. European Commission President Ursula von der Leyen called it “a hard blow to the global economy,” warning that the repercussions could be felt for years.
On April 22, the International Monetary Fund (IMF) downgraded its global growth forecasts: 2.8% for 2025 and 3% for 2026, after cutting them by 0.5 and 0.3 percentage points respectively—just within the last three months.
In response, major exporting countries are taking action. China, Japan, and South Korea are fast-tracking negotiations to establish a free trade agreement to reduce their dependence on the U.S. market. Mexico, for its part, lowered its 2025 growth projection to a range between 1.5% and 2.3%.
Trump promises a “new golden age” for the American economy. But what lies ahead looks more like a landscape of trade tensions, financial instability, and major strategic shifts in the global economic order.
