ICC boss: Tit for tat tariffs response risks return to Great Depression

Thursday 03 April 2025 12:44 pm

A ‘tit for tat’ response to Donald Trump’s tariffs dangers plunging the world into an financial slowdown redolent of the Nice Despair, the top of the world’s largest commerce physique as warned.

Talking to Metropolis AM, John Denton, secretary basic of the Worldwide Chamber of Commerce (ICC), cautioned world leaders that any “inconsiderate and knee jerk reactions” to the sweeping import levies introduced by the Donald Trump on Wednesday would danger the the “financial catastrophe” of returning to circumstances much like the historic malaise of the Nineteen Thirties.

“Whenever you have a look at the dimension and enhance in tariffs, that is Nineteen Thirties stage,” he stated. “In actual fact, in the event you have a look at it in share phrases, it’s really higher.

“What occurred within the 30s was the retaliatory results mainly snowballed all through the worldwide financial system and brought on what may solely be described as an financial catastrophe for everybody that led to a number of issues.”

“We’re in that territory right now,” he added.

The ‘Smoot-Hawley’ Tariff Act of 1930, which utilized a roughly 20 per cent responsibility on all overseas imports to the US, is broadly attributed as being one of many predominant drivers of the decade-long financial melancholy of the Nineteen Thirties.

Over 25 nations responded to the levies utilized by the Hoover administration by elevating their very own tariffs on US-produced items, choking off international commerce and worsening the monetary downturn.

However the spherical of so-called ‘reciprocal’ tariffs introduced by Donald Trump within the White Home on Wednesday in lots of circumstances go additional than these of the Nineteen Thirties. US imports from nations like China, Vietnam Cambodia will now be subjected to fees in extra of 45 per cent because the US President seems to be to revitalise America’s industrial base and coax producers to the nation.

A tariff of 20 per cent shall be utilized to all imports from the European Union, the US’s largest buying and selling associate.

Return to Nineteen Thirties might be prevented

However regardless that the extent of this newest spherical of tariffs is in lots of circumstances extra excessive than these of the Nineteen Thirties, Denton, whose physique the ICC represents 45m nations in over 170 nations, added {that a} return to the recessions of the Nineteen Thirties may very well be prevented.

“The truth is that as vital because the US financial system is, its measurement as a buying and selling nation must be understood,” he stated.

“The US solely accounts for 13 per cent of worldwide commerce… China is 17 per cent, the European Union is far bigger. The rationale I say that’s that it’s very onerous for the US by itself to really engender a commerce battle. It should solely occur if… the retaliation comes into play.”

European Fee President Ursula von der Leyen has stated that the European Union is “ready to reply” to America’s new levies, however dedicated to a spherical of negotiations earlier than unleashing any response.

In the meantime, the UK’s enterprise secretary Jonathan Reynolds instructed Instances Radio this morning that whereas the tariffs offered a “problem”, the federal government would keep away from speeding into any response.

And requested about whether or not a possible commerce cope with the Trump administration would assist keep away from, the minister stated signing the settlement it was “largely within the present of the US”.

Enhancements in different commerce relations

Denton, who has held his function because the ICC’s secretary basic since 2018, additionally raised the prospect of Trump’s tariffs appearing as boon to international commerce that precluded the US.

He instructed Metropolis AM that the transfer “ought to completely” result in commerce limitations between different nations coming down, including “I believe what it should do is… focus everybody’s thoughts.

“As a result of I do know the political pink traces of everybody are very troublesome. However on commerce facilitation [and] on the regulatory impediments which may really be simplified, they should double down on that as rapidly as doable.”