The anti-Trump media are pounding the drums, trying to drive people into a panic by contending that Trump’s tariffs are a Smoot-Hawley moment combined with a 1929-style stock market crash. It is, they suggest, a perfect storm of Trump-created economic devastation. What they’re not telling people—indeed, what they may not know themselves—is that the situation is different, both as regards the stock market and what happened with the Smoot-Hawley tariffs.

I’ll start with the latter first. First, as Van A. Mobley explains with great clarity, it’s dishonest to compare Trump’s tariffs to the Smoot-Hawley Act. The difference is that, in 1930, when Congress passed the Smoot-Hawley Act, America was a creditor nation (that is, it was selling to Europe, which had been seriously damaged by World War I). This time around, in 2025, America is a debtor nation (that is, it’s buying from everyone else):

When the United States raised the Smoot-Hawley tariffs, the U.S. was the world’s greatest creditor, and by raising the tariffs, we prevented others from selling us things so they could make money and pay us back. When they didn’t pay us back, it collapsed the global financial system and helped usher in the Great Depression.

Obviously, today the circumstances are reversed. The United States is now the world’s largest debtor. If we can’t pay back our debts, the global financial system will collapse, which would be disastrous for the entire world.

Put another way, the world depends on our custom. To the foreign countries’ chagrin, though, because they’ve put barriers between our products and their markets, Trump threatened to and then did put a barrier between their products and our market.

No wonder, then, that, upon realizing that Trump wasn’t just blowing smoke with his promised reciprocal tariffs (all, or almost all, of which are lower than those imposed on American goods), 130 nations have decided to renegotiate their trade deals with America. Trump understood the marketplace, while the less well-informed, anti-Trump people in the media did not.

Here’s something else Trump probably knows that the media do not: The stock market situation is very different now than it was in 1929.

Although our stock market has been pumped up beyond reason thanks to Biden’s money-printing schemes, it’s not really a bubble, as bubbles have been understood in history. In history, bubbles saw unbelievable frenzies as people frantically bid up essentially valueless goods, whether tulips or worthless (at the time) land in the South Seas or in Florida. In those cases, the market was essentially a Ponzi scheme, and when it collapsed, thousands of investors lost everything instantly.

It’s different now when the shares being traded are in companies that actually have a value; they’re simply being overrated because of Bidenflation and a stagnant Biden economy that left investors without another place to park all the cash floating around.

And about those investors. In the “Roaring” part of the 1920s, everybody and his uncle (and aunt) wanted to get into the stock market. It was seen as an easy way to make money. You were walking into the casino with loaded dice and marked cards, and all the slot machines were coming up cherries.

The problem was that all these mom-and-pop investors were playing with other people’s money by buying stocks on the margin—that is, borrowing money from the broker:

Buying stocks on margin brought hundreds of thousands of new investors into the market. Under the loose rules of the time, they could purchase a stock by simply laying down 10 percent of its cost and borrowing the rest from banks or stockbrokers – buying, for example, $1,000 worth of a stock and handing over just $100 in cash. If your $1,000 in stocks then rose in value to $1,075, you made $75 on your $100 investment when you sold the stock – or so it seemed. That $75 profit existed only on paper, because you still had to pay back the bank or broker who loaned you the $900 at a rate somewhere in the neighborhood of 14 to 19 percent. Investors at that time did not seem to care all that much, however, because they were making money. To many, buying stocks on margin was easy money and a way to get rich quick. But if your stock went down in value, the broker would demand more and more of the loan to be paid in cash to cover the loss.

You can still borrow from your broker to buy stocks today, but margin purchases are capped at 50% of the stock cost, and there are other very stringent rules in place to ensure that the entire stock market isn’t built on funny money. Most investors, however, aren’t investing on the margin. Instead, most investors today are institutional: pension funds and mutual funds. Mom-and-pop aren’t doing the trading anymore; instead, big companies that are very careful with their assets and are studying closely the stocks in which they invest are driving the market.

This means that, when the market goes down, people and their brokers aren’t completely destroyed. Back in the 1920s, people were gambling with money they didn’t have, so when they lost, they had less than nothing—as did the brokers who made what turned out to be bad loans to poor risks.

However, in today’s situations, what happens (mostly) is that people’s unrealized capital gains shrink. While that can be really bad for people on the verge of drawing on those gains, whether through retirement or by selling shares they hold personally, for the most part, it just means rich people and rich funds are worth less...at least, temporarily.

(And don’t even get me started on the bank runs that won’t happen this time around, thanks to FDIC insurance and most ordinary people’s accounts. Yes, the federal government is already in debt, but the bank runs were a disastrous domino that we’re better prepared to stave off if, God forbid, the worst happens.)

If Trump’s gamble pays off (and I believe it will), and if the institutional investors who dominate the market don’t panic (and they shouldn’t), our economy will come out of this stronger. Not only will stock prices rise again, but the prices will be tied to the actual value of the companies in which people are investing. That makes for a solid stock market, not a semi-bubble propped up by inflation and economic inertia.

So, while I’m no economic genius, and only a fool would take investment advice from me, I do know a little bit about history—and history tells me that whatever else happens in the market, it’s definitely not 1929 or 1930 this time around.

Wall Street in 1929 after the crash. Public domain.