Liberation Day: Will April 2, 2025 Mark the Beginning of Great Depression-II?
Author
Parneet Sachdev
April 2, 2025. A date that may go down in history as the turning point in global economic order. Dubbed "Liberation Day", President Donald Trump’s sweeping announcement of extreme tariffs has sent tremors through financial markets, ignited geopolitical tensions, and sparked fears of a second Great Depression.
As the world scrambles to process this seismic shift, Singapore’s Prime Minister Lawrence Wong’s somber message echoed the growing sense of uncertainty:
“The era of rules-based globalisation and free trade is over. We are entering a new phase – one that is more arbitrary, protectionist, and dangerous.”
A New Economic Fortress
President Trump’s long-held views on tariffs have finally culminated in a full-scale protectionist strategy. Tariffs of 49% on Cambodian goods, 46% on Vietnamese imports, and an additional 34% on Chinese products (on top of an earlier 20%) were announced. The European Union is now facing a 20% import tax, and even close neighbours Mexico and Canada have seen their auto-related exports hit with cost surges of $4,000–$10,000 per vehicle.
Economists like Ken Rogoff, former IMF Chief Economist, have swiftly responded, raising the probability of a recession to 50%—a chilling reflection of how rapidly the global economic climate may deteriorate.
History Repeating: Lessons from the 1930s
To understand the gravity of today’s decisions, we must revisit a similar turning point nearly a century ago. In the 1930s, protectionist measures like Smoot-Hawley tariffs set off retaliatory economic policies, triggering a 66% decline in global trade by 1933 and worsening the Great Depression. Trade wars weren’t merely economic battles; they became preludes to real wars.
As Cordell Hull, U.S. Secretary of State and Nobel Peace Prize laureate, declared in 1937:
“Enduring peace and the welfare of nations are indissolubly connected with the maximum practicable degree of freedom in international trade.”
Hull’s warning wasn’t just philosophical—it was grounded in experience. The economic hostilities of the 1920s and 1930s created a vortex of unemployment, inflation, and nationalist fervour, eventually leading to World War II.
The Atlantic Charter: A Forgotten Beacon
In 1941, amid the horrors of WWII, Winston Churchill and Franklin D. Roosevelt met off the coast of Newfoundland and drafted the Atlantic Charter—a brief but visionary document comprising just eight clauses. These clauses laid the foundation for the rules-based international order, emphasizing access to global trade, economic cooperation, and shared prosperity.
Clause 4: Equal access for all nations to trade and raw materials necessary for prosperity.
Clause 5: Global collaboration to improve labour standards, economic advancement, and social security.
It was these ideals that led to the creation of institutions like the IMF, World Bank, and later the World Trade Organization—pillars that enabled the longest era of relative peace and economic growth in modern history.
But that structure may now be crumbling.
Liberation or Isolation?
The irony is unmistakable. The United States, once the architect of open markets, is now the one tearing them down. As Singapore’s Prime Minister aptly put it:
“The USA was the bedrock for the free market economies of the world. It championed free trade… Now, that foundation is cracking.”
The international response has been swift and damning:
China: Counter-tariffs of 34% starting April 10.
EU: “Dire consequences for millions,” warns Ursula von der Leyen.
Australia: “Not the act of a friend,” says PM Albanese.
South Korea & Japan: Trade war fears turn real.
Are We on the Brink?
The warning signs are eerily familiar. Hunter Nottage of the WTO wrote that the Atlantic Charter was born out of a desire to never repeat the mistakes of the 1930s. But that document, which once anchored peace and global collaboration, now seems symbolically dead.
As trade walls rise once again, the question becomes urgent:
Are we witnessing the dawn of Great Depression-II?
Singapore’s Prime Minister concluded his address with a warning: “We must brace ourselves for more shocks to come.” The time to heed history is now.
Disclaimer: The views expressed are the author’s own and do not represent the official stance of any institution.
