While tariffs are often a game of "economic chicken" whereby the mere threat of them achieves fair trade policies, sometimes they stick, and when they do, the results can be disastrous.

Many economists blame the Smoot-Hawley Trade Act of 1930 for exacerbating the Great Depression. At a time when the U.S. economy needed trade to grow jobs amid the run-on banks, the Smoot-Hawley tariffs did just the opposite. They raised prices when consumers were unemployed and bankrupt. U.S. trade shrank instead of growing as intended, and companies lost more money, intensifying the economic death spiral.

If the current Trump tariffs remain in place for the next year, they will slash GDP by 0.6 percent in 2025, according to The Budget Lab at Yale. Added to the Doge damage, the tariffs could push the economy into a broad recession that would cause a double-digit drop in the U.S. stock markets.

So far, the trade discussions surrounding the tariffs are mixed. Mexican President Claudia Scheinbaum, has not countered the Trump tariffs with protectionist action. She says she is considering ways to work with the Trump administration on a less severe solution that would achieve better trade between the two countries. Canada, however, has not been so gracious. Immediately in response to Trump's tariffs, Canadian President Justin Trudeau struck back with tariffs of his own and threats to end Canadian water sales to the U.S.

The stock market's response on Tuesday was a 1.5 percent drop in the Dow Jones Industrial average. Later that evening, Commerce Secretary Howard Lutnick announced that the President is considering other ways to achieve the same trade, immigration, and public safety goals but do less damage to the economy. In response, the market bounced back the very next day.

Nonetheless, the Smoot Hawley tariffs, while not the sole factor in the Great Depression, are blamed for precipitating it. Sustained tariffs are contractionary. Added to the mass reduction of government programs and workforce, the tariffs will make the likelihood of a severe economic contraction that much greater. A stock market selloff will no longer be a moot point but rather a Smooth one.