Trump’s Liberation Day’ Tarrifs Spark Fears of Global Depression Amid $38 Trillion US Debt Crisis
posted 2nd April 2025
Trump’s Liberation Day’ Tarrifs Spark Fears of Global Depression Amid $38 Trillion US Debt Crisis
London, 2 April 2025 – As the United States braces for what President Donald Trump has dubbed “Liberation Day,” a sweeping new round of tariffs set to take effect today threatens to deepen the nation’s economic woes and potentially drag the global economy into a depression. With the US national debt hovering at an staggering £30 trillion (approximately $38 trillion), economists and world leaders are sounding the alarm over the risks posed by Trump’s aggressive trade policies, which come at a time of marked economic decline in the world’s largest economy.
Trump’s “Liberation Day,” announced with characteristic bombast from the White House Rose Garden at 9:00 PM BST (4:00 PM ET), introduces reciprocal tariffs aimed at matching duties imposed by other nations on American goods. The policy, which Trump claims will “free America from foreign exploitation,” includes a 20% blanket tariff on most imports and a 25% levy on auto imports, effective immediately. The administration argues this will revitalise US manufacturing and reduce a trade deficit exceeding £960 billion ($1.2 trillion).
However, critics warn that the move could backfire spectacularly, exacerbating an already precarious economic situation.
The US debt, now at levels unseen since the Second World War, has become a ticking time bomb. Interest payments alone are projected to surpass £800 billion annually, outstripping federal spending on defence. This burden, combined with a slowing economy—Goldman Sachs recently slashed its growth forecast to a mere 0.6% for this quarter—has fuelled fears of a recession. Consumer confidence has plummeted to its lowest since 2021, and the S&P 500 has shed nearly 10% of its value since mid-February, erasing gains made since Trump’s re-election.
Economists point to historical parallels, notably the Smoot-Hawley Tariff Act of 1930, which deepened the Great Depression by choking global trade. “Tariffs on this scale could trigger a domino effect,” said Professor Eswar Prasad of Cornell University. “With the US economy already fragile and the debt burden unsustainable, we’re staring at a potential global depression.” The Tax Foundation estimates that Trump’s tariffs could knock US GDP by 1.3% and cost half a million jobs, even before foreign retaliation is factored in.
Across the Atlantic, the mood is equally grim. The UK, facing its own trade declines, could see limited benefits from rerouting opportunities, according to Aston Business School research, but the broader impact of a US-led trade war could cost the global economy £1.1 trillion ($1.4 trillion). British manufacturers, already grappling with post-Brexit challenges, fear higher costs for imported materials, while retailers brace for price hikes that could squeeze consumers further.
Trump’s tariffs have also strained alliances. Canada’s Prime Minister Mark Carney declared the end of the “old relationship” with the US, announcing retaliatory duties, while French President Emmanuel Macron warned of “breaking value chains” and job losses across Europe. China, meanwhile, has forged a new trade pact with Japan and South Korea, a move seen as a direct response to Trump’s policies. “There are no winners in trade wars,” said Chinese Foreign Ministry spokesperson Guo Jiakun, echoing a sentiment shared by many.
The White House remains defiant. Trade adviser Peter Navarro claims the tariffs could raise £4.8 trillion ($6 trillion) over a decade, enough to offset tax cuts and bolster domestic industry. Yet, mainstream economists dispute this, arguing that higher prices will dampen demand, reducing revenue far below projections. For the average American household, the Yale Budget Lab estimates an annual cost of £2,160–£2,720 ($2,700–$3,400), hitting lower-income families hardest.
As “Liberation Day” dawns, the question looms: will Trump’s gamble stabilise the US economy or plunge it—and the world—into a depression reminiscent of the 1930s? With stock markets jittery, consumer sentiment souring, and the US debt spiralling, the stakes could not be higher. For now, the globe watches anxiously, hoping history does not repeat itself.
