**Washington**: The article examines the historical significance of tariffs in the US economy, tracing their impact from the 19th century through Trump’s administration. Scholars weigh in on the effectiveness of tariffs, particularly in relation to industrialisation and trade deficits with China, amid broader economic contexts.
The United States has a long and complex history with tariffs, a subject that has gained renewed attention during the presidency of Donald Trump. Early in his administration, Trump made headlines with his emphasis on protective tariff policies, frequently referring to the historical economic advantages seen during the 19th century, when average tariff rates approached 50 percent. Speaking to the YEN website, Dartmouth College economics professor Douglas Irwin commented that “we have a 20th century president in a 21st century economy who wants to take us back to the 19th century.”
Throughout the 19th century, tariffs were employed as a part of economic doctrine aimed at protecting and stimulating the nascent American economy as it underwent significant industrialisation. Keith Maskus, a professor at the University of Colorado, noted, “careful studies of that period suggest that the tariffs did help protect domestic development of industry to some degree.” However, he added that other factors—such as access to international labour and the influx of capital—played critical roles during this era.
Economic access was further enhanced by the abundance of natural resources, including coal, oil, iron ore, copper, and timber, which were all vital to industrial growth. Christopher Meissner, a professor at the University of California, Davis, asserted that “the reason we had a thriving industrial sector in the United States was we had great access to natural resources,” suggesting that the industrial sector’s expansion would not have been significantly impacted had tariffs been lower.
Trump’s administration referenced this historical context, with Trump declaring that America was at its wealthiest between 1870 and 1913, and often linking his policies to those of former President William McKinley, who presided over one of the country’s most restrictive tariff laws in 1890. However, historical records indicate that even during periods of high tariffs, imports continuously grew, and after tariff reductions in 1894, the volume of goods imported did not return to previous highs.
The implications of tariff policies came into sharper focus during the Great Depression. In 1929, Harvard professor George Roorbach observed that the protective tariff system established post-Civil War did not prevent the expansion of import trade. In 1930, the Smoot-Hawley Tariff Act, enacted under President Herbert Hoover’s Republican administration, has been widely critiqued for provoking a global trade war and exacerbating the economic downturn that characterised the Great Depression. Maskus explained, “What generated the depression… was a lot of complicated factors, but the tariff increase is one of them.”
Following the Second World War, global trade dynamics shifted, particularly with the ratification of the General Agreement on Tariffs and Trade (GATT) in 1947 by 23 nations, which included the United States. This agreement aimed to facilitate international trade through moderated customs duties, a momentum that continued with the North American Free Trade Agreement (NAFTA) in 1994 and, later, the establishment of the World Trade Organization in 1995.
Trump’s focus on tariffs resurfaced during his first term as he introduced new measures aimed primarily at China. Despite these tariffs, the U.S. trade deficit with China showed no signs of reduction, continuing to grow until 2022 when the Chinese economy experienced a significant slowdown, attributed to factors beyond tariff impacts. Maskus pointed out that the tariffs imposed on China did little to curb the increasing volume of imports from that country.
This multifaceted discourse on tariffs in the United States encapsulates a historical journey characterised by fluctuating economic theories and outcomes, with contemporary debates reflecting the complexities and consequences that tariff policies can entail.
Source: Noah Wire Services
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