Former Federal Reserve Bank of St. Louis President James Bullard said early Monday that President Trump’s tariffs could risk severely worsening the economy, in a way that mirrors the consequences of the protectionist trade measures put in place in the early days of the Great Depression.

“The main thing is that this has dramatically raised the risk of a Smoot-Hawley type outcome,” Bullard, dean of Purdue University’s Daniels School of Business, said on CNBC’s “Squawk Box,” referring to the Smoot-Hawley Trade Act of 1930.

“So Smoot-Hawley was 1930. Other countries retaliated. Global trade collapsed, and the Great Depression was on. So I think that’s really what has people worried about this.”

Bullard stressed that such dire consequences are not guaranteed, but he said he agrees with assessments that the risk of a recession has increased.

“It doesn’t have to work out that way, but this unilateral move, abrupt, is setting up a situation where you could get a dramatic downturn in the economy,” Bullard said. “So Wall Street is marking up its recession probabilities, and I think that’s appropriate.”

Trump announced sweeping new tariffs last Wednesday, prompting some countries to immediately respond with similar or reciprocal tariffs on U.S. goods.

Trump has defended the tariffs, saying other countries have been ripping off the United States for decades while presidents in both parties have not done enough to defend U.S. workers and manufacturers.

Stock markets have plummeted, but the president has generally shrugged off the losses, noting markets go up and down. He has also encouraged Americans to buy into the markets at the lower prices.

Tags Donald Trump James Bullard Smoot-Hawley tariff act tariffs

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