The British professor, who is affiliated with MIT University in Boston, was asked about today's situation resembling the events of the 1930s in SVT's Agenda.
Yes, absolutely. It can be compared to the early years after the great stock market crash of 1929, when a trade war began and several major banks went bankrupt. The great depression took off a few years after that, he says in the program.
Different Messages
The difference is that it is now the US government that is "provoking this potential catastrophe", he says.
President Trump says that everything is negotiable. He and (US Trade Minister Howard) Lutnick have different messages, which contributes to the main problem – uncertainty. We do not know what the policy is. We do not know how the tariffs will end up.
Johnson says that smaller economies risk being crushed by the US tariffs, while larger counterparts, such as the EU and China, will be able to stand up for themselves.
This is how a global trade war begins.
"Insane Politics"
He says that ordinary Americans will notice the tariffs and become very upset – including those who voted for Trump. He calls it "insane politics" justified "in an incredibly ridiculous way".
The tariffs are a very high tax that primarily affects Americans with the worst economy. It is the highest tax increase in over 50 years. It affects the 20-30 percent with the lowest incomes, says Johnson in SVT.
The stock market crash on Wall Street in October 1929 quickly spread beyond the US borders and led to a global recession, with reduced trade and high unemployment for many years thereafter.
