How Stupid Is an Economic War Against the World?
By Goldsea Staff | 02 Oct, 2025

It's not only stupid but self-destructive and devastating for our nation's future, according to analysis by virtually all economists, and yet that's precisely what the US has been doing by unilaterally imposing high tariffs on every other nation.

History provides clear precedent in the form of the Smoot-Hawley Tariff Act of 1930 that worsened the Great Depression by sparking retaliatory tariffs that shrank global trade by two-thirds.  The US relied far less on global trade back then.  So the impact of today's Trump tariffs have the potential to be even worse than the Great Depression debacle created in large part by simple-minded protectionists who see global trade as a zero-sum game.  

(Illustration of Tariff Impact by ChatGPT)

In reality, the US is by far the biggest beneficiary of global trade because the US brand multiplies the value of anything American for the rest of the world, providing Americans an extremely high living standard unmatched elsewhere in real terms.  So why take a sledge hammer to this spectacularly advantageous global trade system?  Sheer self-destructive stupidity (alternatively, gross self-interest in creating a toll-gate with which to enrich the President's personal ventures — but that's another story for a later date), at least according to the AI analysts we retained to cogitate on this issue.

Our prompt was: 

How stupid is it to start an economic war against the entire world by imposing high tariffs on imports from every other nation?

ChatGPT:

It’s not just “stupid” — it would be economically self-destructive on a massive scale. Let’s break it down:

1. Global Retaliation

• If one country (say, the U.S.) imposed high tariffs on all imports, every other nation would almost certainly retaliate with their own tariffs and restrictions.

• That would shut U.S. exporters out of most markets, crippling industries like agriculture, aerospace, semiconductors, and autos, which rely heavily on foreign sales.

2. Massive Consumer Price Inflation

• Since the U.S. imports trillions of dollars of goods annually, tariffs would instantly raise prices on clothing, electronics, cars, food, medicine, and machinery.

• The average household would see costs spike — not by 5–10%, but by double digits across the board.

3. Supply Chain Collapse

• Modern supply chains are global. Everything from iPhones to cars to medical devices involves parts from multiple countries.

• Disrupting imports doesn’t just make final goods expensive — it can make them unavailable, halting domestic production.

4. Job Losses

• Export-dependent industries (Boeing, farms, chipmakers) would shed millions of jobs.

• Import-reliant sectors (retail, logistics, manufacturing that uses foreign parts) would also collapse.

• Any jobs "protected" by tariffs would be far fewer than the jobs destroyed.

5. Global Isolation

• The U.S. would effectively abandon global trade leadership. Other countries would deepen ties with one another (e.g., EU–China, BRICS, ASEAN), leaving the U.S. excluded.

• Over time, foreign companies would innovate around U.S. markets, and the dollar’s role as the global reserve currency could weaken.

6. Historical Lessons

• Smoot-Hawley Tariff Act (1930) worsened the Great Depression by sparking retaliatory tariffs that shrank global trade by two-thirds.

• That was at a time when the U.S. was less integrated into global supply chains than today — meaning the damage now would be far worse.

📉 Bottom line: Starting an economic war against every other nation is essentially economic suicide. It would cause runaway inflation, job losses in both export and import industries, a collapse of supply chains, and the long-term erosion of U.S. global power.

Would you like me to model quantitatively (with data on U.S. imports, exports, and tariff elasticities) just how bad the impact would be in dollar terms?

Short plain-English takeaway (no math)

1. Even moderate, economy-wide tariffs (25–50%) would raise consumer prices sharply — low-to-mid single digits (a 25% tariff is likely to add roughly 2–6 percentage points to consumer prices by direct pass-through alone). That’s a big, immediate hit to household purchasing power. Federal Reserve+1

2. Retaliation would slam U.S. exporters. Models show large declines in export revenues (tens of percent in severe tit-for-tat cases), which translate into multi-hundred-billion-dollar losses and GDP declines of a few percent. That means large job losses in export sectors and upstream supply chains. IMF

3. Supply-chain and intermediate-goods effects amplify the damage. Tariffs on intermediate inputs raise domestic production costs, potentially causing production stoppages, shortages, and even more price inflation. Modern supply chains mean tariffs don’t just protect jobs — they disrupt production. US International Trade Commission

4. History and recent empirical work agree: the Smoot-Hawley episode and modern tariff episodes both show that broad tariff wars shrink trade dramatically and deepen recessions — in today’s far more globally integrated economy, the economic damage would likely be larger than in the 1930s. Encyclopedia Britannica+1

Uncertainties and caveats

• These are first-order estimates that capture direct pass-through and direct export-revenue losses. Full macro models add further channels (exchange rate movements, monetary policy tightening, substitution to domestic goods, job reallocation, long-run investment effects) that typically worsen welfare and can make the short-run inflation + recession combination especially painful. Penn Wharton Budget Model

• The size of retaliation matters a lot. A few countries quietly divert trade to third markets → smaller export hits; coordinated global retaliation → extreme export losses. The IMF scenarios show this sensitivity. IMF

• Pass-through varies by product: fabrics, electronics, autos, pharmaceuticals behave differently. My aggregation is intentionally simple to show scale; sectoral analyses will show bigger effects for some industries.

Bottom line (one sentence)

Starting an economic war by imposing high tariffs on all imports would very likely cause multi-point increases in consumer prices, remove hundreds of billions to over a trillion dollars of export revenue (several percent of GDP), and trigger job and supply-chain shocks so large the economy could slip into recession — in short, not merely “stupid,” but economically self-destructive at scale. Federal Reserve+2IMF+2

**

Copilot:

Imposing high tariffs on imports from nearly every other nation is widely considered economically reckless, if not outright self-destructive, by most mainstream economists. Here's why:

📉 Economic Consequences of Broad Tariffs

• GDP and Wage Decline: The Penn Wharton Budget Model projects that President Trump’s sweeping tariff plan could reduce long-run U.S. GDP by about 6% and wages by 5%. For a middle-income household, that translates to a $22,000 lifetime loss.

• Consumer Price Hikes: Tariffs function like taxes on imported goods. The cost is typically passed on to consumers, leading to higher prices on everything from washing machines to pharmaceuticals.

• Retaliation and Export Losses: Other countries often retaliate with their own tariffs, hurting U.S. exporters—especially farmers and manufacturers. Soybeans, pork, and other agricultural products have already seen plummeting overseas demand due to retaliatory tariffs.

• Supply Chain Disruption: Global supply chains are deeply interconnected. Tariffs on components like semiconductors or steel raise costs for U.S. manufacturers, squeezing profits and reducing competitiveness.

• Sectoral Imbalance: While manufacturing might see a short-term boost, services and agriculture suffer. Overall employment declines, and income losses vary widely across states.

🧨 Strategic Risks

• Alienating Allies: Blanket tariffs strain diplomatic ties and undermine trade agreements. Allies like Canada, Mexico, and the EU have already faced steep tariff hikes, eroding trust and cooperation.

• Global Instability: A trade war of this scale can ripple through global markets, triggering inflation, slowing growth, and destabilizing emerging economies.

• False Sense of Security: While tariffs may protect certain domestic industries temporarily, they often delay necessary innovation and adaptation. Long-term competitiveness suffers.

In short, starting an economic war with the entire world via universal tariffs is not just “stupid”—it’s economically regressive, politically isolating, and strategically dangerous. If you're exploring this theme for a story or visual concept, we could dramatize the fallout or explore symbolic representations of economic isolation. Want to go there?