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Last April, in language recalling the Declaration of Independence, Donald Trump announced a “liberation day” featuring an extraordinary campaign of massive tariff hikes. He and his administration have made clear their political inspirations: the Republican congressman and later president William McKinley, who imposed high duties to protect manufacturing at the end of the 19th century; before him senator and secretary of state Henry Clay, who brokered a tariff compromise between agricultural and industrial interests in the 1830s; and the first Treasury secretary, Alexander Hamilton, who imposed tariffs to finance the federal government of the new republic.
For once Trump isn’t completely wrong: the US very much does have a high-tariff tradition. Its embrace of free trade and globalisation in recent decades — in rhetoric if not always in practice — is not a consistent position during the 250 years of the republic.
Yet, unsurprisingly, Trump’s own trade policy isn’t the revival of a familiar tradition of tariffs so much as a chaotic mess. One of its most disturbing features has been a highly unusual abrogation of the role of Congress, whose power “to regulate Commerce with foreign nations” is hard-wired into Article I of the US constitution.
A look at the specifics of the history of US trade policy shows not just how ahistorical Trump’s view is, but the role of chance and accident. History is rarely neat; correlation is frequently confused with causation; time and chance happen to them all.
The great historian of US trade Doug Irwin posits that tariff policy has been motivated by the three Rs — revenue, restriction (protectionism) and reciprocity. Some present-day protectionists, including but not limited to Trump, cite Hamilton and his 1791 “Report on Manufactures” as support for an aggressively interventionist industrial policy with the state fostering industrial development behind protective tariff walls.
In reality, as Irwin points out, Hamilton’s main concern was raising revenue. The young republic, with a weak federal government, could not muster the political support or administrative capacity for an income tax and needed to collect taxes on goods passing through the ports.
Tariffs did protect manufacturing, but they were kept relatively low and imports were not discouraged. The explicitly protectionist use of duties to restrict imports — the second of Irwin’s Rs — came later, in the 19th century. It led to persistent battles between agriculture, which at this stage was highly competitive internationally and wanted to keep tariffs low, and manufacturing, which feared competition from Britain and wanted protection.
The McKinley tariff of 1890, although notorious for being politically disastrous — the Republicans were hammered in elections two years later — was squarely in the late-19th-century tradition of manufacturing protectionism. Trump’s invocation of it as an essential part of the US’s industrial growth is misplaced: Irwin shows that if anything tariffs held back the development of manufacturing.
The truly infamous episode of protectionism was the Smoot-Hawley Act of 1930, credited with setting off a global spiral of tariffs that worsened the Great Depression. Even Trump didn’t try to claim Smoot-Hawley as a historical inspiration. It happened somewhat by accident: a modest mooted increase in tariffs to support agriculture led to lawmakers representing manufacturers adding in their own protection. The thing got totally out of control and provoked fierce retaliation from trading partners, which took Congress largely by surprise. (That, at least, was a precursor of Trump, who apparently didn’t see the response by China, in particular, to his tariffs coming.)
A long period of unwinding the Depression-era tariffs followed, begun by Franklin D Roosevelt and continuing in a multilateral context, a couple of protectionist hiccups under Richard Nixon and Ronald Reagan notwithstanding. By the time Trump was elected in 2016, US discontent with trade and globalisation was certainly rising, a consequence of the rise of China, but his deviation into protectionist eccentricity was quite extraordinary.
Trump’s trade policy is a shambles because he’s trying to achieve the three Rs and several other targets at once. He wants tariff revenue to replace the federal income tax. That’s not just ludicrous, given the size of the modern state — it also wildly contradicts his desire to protect favoured industries and to negotiate other countries’ tariffs lower. By definition, tariffs can’t raise revenue if imports are being kept out or if they are cut in a reciprocal deal. US manufacturing continues to shed jobs: Trump, like a medieval physician trying to revive an ailing patient, keeps applying leeches.
The political unpopularity of his tariffs has forced Trump to a standstill, for now. Which way he goes next is anyone’s guess. But whatever he does, there will certainly be some aspect of the complex and contradictory history of US trade policy that he can wrongly claim as his own.
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