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US tariff history

Main article: History of tariffs in the United States

According to Douglas Irwin, tariffs have historically served three main purposes: generating revenue for the federal government, restricting imports to protect domestic producers, and securing reciprocity through trade agreements that reduce barriers. The history of U.S. trade policy can be divided into three distinct eras, each characterized by the predominance of one goal. From 1790 to 1860, revenue considerations dominated, as import duties accounted for approximately 90% of federal government receipts. From 1861 to 1933, the growing reliance on domestic taxation shifted the focus of tariffs toward protecting domestic industries. From 1934 to 2016, the primary objective of trade policy became the negotiation of trade agreements with other countries. The three eras of U.S. tariff history were separated by two major shocks—the Civil War and the Great Depression—that realigned political power and shifted trade policy objectives.

Political support by members of Congress often reflects the economic interests of producers rather than consumers, as producers tend to be better organized politically and employ many voting workers. Trade-related interests differ across industries, depending on whether they focus on exports or face import competition. In general, workers in export-oriented sectors favor lower tariffs, while those in import-competing industries support higher tariffs.

Because congressional representation is geographically based, regional economic interests tend to shape consistent voting patterns over time. For much of U.S. history, the primary division over trade policy has been along the North–South axis. In the early 19th century, a manufacturing corridor developed in the Northeast, including textile production in New England and iron industries in Pennsylvania and Ohio, which often faced import competition. By contrast, the South specialized in agricultural exports such as cotton and tobacco.

In more recent times, representatives from the Rust Belt—spanning from Upstate New York through the industrial Midwest—have often opposed trade agreements, while those from the South and the West have generally supported them. The regional variation in trade-related interests implies that political parties may adopt opposing positions on trade policy when their electoral bases differ geographically. Each of the three trade policy eras—focused respectively on revenue, restriction, and reciprocity—occurred during periods of political dominance by a single party able to implement its preferred policies.

Colonial period

Trade policy was a subject of controversy even prior to the independence of the United States. The thirteen North American colonies were subject to the restrictive framework of the Navigation Acts, which directed most colonial trade through Britain. Approximately three-quarters of colonial exports were enumerated goods that had to pass through a British port before being reexported elsewhere, a policy that reduced the prices received by American planters.

Historians have debated whether British mercantilist policies harmed American colonial interests and fueled the American Revolution. Harper estimated that trade restrictions cost the colonies about 2.3% of their income in 1773, though this excluded benefits of empire, such as defense and lower shipping insurance. The economic burden of the Navigation Acts fell mostly on the southern colonies, especially tobacco planters in Maryland and Virginia, potentially reducing regional income by up to 2.5% and strengthening support for independence. American foreign trade declined sharply during the Revolutionary War and remained subdued into the 1780s. Trade revived during the 1790s but remained volatile due to ongoing military conflicts in Europe.

Revenue period (1790–1860)

Beginning in 1790, the newly established federal government adopted tariffs as its primary source of revenue. There was a consensus among the Founding Fathers that tariffs were the most efficient way of raising public funds as well as the most politically acceptable. Early sales taxes in the post-colonial period were highly controversial, difficult to enforce, and costly to administer. This was evident during events like the Whiskey Rebellion, where the enforcement of sales taxes led to significant resistance. Similarly, an income tax did not make sense for numerous reasons, particularly due to the complexities of tracking and collecting it. In contrast, tariffs were a simpler solution. Imports entered the United States primarily through a limited number of ports, such as Boston, New York City, Philadelphia, Baltimore, and Charleston, South Carolina. This concentration of imports made it easier to impose taxes directly at these points, streamlining the process of collection. Furthermore, tariffs were less visible to the general public because they were built into the price of goods, reducing political resistance. The system allowed for efficient revenue generation without the immediate visibility or perceived burden of other tax forms, contributing to its political acceptability among the Founders.

President Thomas Jefferson initiated a notable policy experiment by enacting a complete embargo on maritime commerce, with Congressional support, beginning in December 1807. The stated objective of the embargo was to protect American vessels and sailors from becoming entangled in the Anglo-French naval conflict (the Napoleonic Wars). By mid-1808, the United States had reached near-autarkic conditions, representing one of the most extreme peacetime interruptions of international trade in its history. The embargo, which remained in effect from December 1807 to March 1809, imposed significant economic costs. Irwin (2005) estimates that the static welfare loss associated with the embargo was approximately 5% of GDP.

From 1837 to 1860, spanning the Second Party System and ending with the Civil War, the Democratic Party held political dominance in the United States. The Democrats drew support primarily from the export-oriented South and promoted the slogan “a tariff for revenue only” to express their opposition to protective tariffs. As a result, the average tariff declined from early 1830s levels to under 20% by 1860. During this period, there were 12 sessions of Congress: 7 under unified government (6 led by Democrats, 1 by Whigs) and 5 under divided control. This meant that over the 34-year span, the pro-tariff Whig Party, based in the North, held power for only two years. They succeeded in raising tariffs in 1842, but this was reversed in 1846 after Democrats returned to power. Throughout the 10 years of divided government, tariff policy remained unchanged.

Civil War (1861–1865)

Some non-academic commentators have argued that trade restrictions were a major factor in the South’s decision to secede during the Civil War, although this view is not widely supported among academic historians. After the 1828 Tariff of Abominations, South Carolina threatened secession, but the crisis was resolved through the Compromise of 1833, which led to a steady decline in tariffs. Further reductions followed in 1846 and 1857, bringing the average tariff below 20% on the eve of the war—one of the lowest levels in the antebellum period. Irwin notes that Southern Democrats had substantial influence over trade policy until the Civil War. He rejects the revisionist claim—often associated with the Lost Cause narrative—that the Morrill Tariff triggered the conflict. Instead, Irwin argues that the Morrill Tariff only passed because Southern states had already seceded and their representatives were no longer in Congress to oppose it. It was signed by President James Buchanan, a Democrat, before Lincoln took office. In short, Irwin finds no evidence that tariffs were a major cause of the Civil War.

Restriction period (1865–1928)

The Civil War shifted political power from the South to the North, benefiting the Republican Party, which favored protective tariffs. As a result, trade policy focused more on restriction than revenue, and average tariffs increased. From 1861 to 1932, the Republicans dominated American politics and drew their political support from the North, where manufacturing interests were concentrated. Republicans supported high tariffs to limit imports, leading to rates rising to 40–50% during the Civil War and remaining at that level for several decades. During this time, there were 35 sessions of Congress, including 21 under unified government (17 Republican, 4 Democratic) and 14 under divided control. Over the span of 72 years, Democrats succeeded in reducing tariffs only twice, in 1894 and 1913, but both efforts were swiftly reversed when Republicans regained power. Although trade policy was often contested, it remained relatively stable due to prolonged one-party dominance and institutional barriers to change.

According to Irwin, a common myth about U.S. trade policy is that high tariffs made the United States into a great industrial power in the late 19th century. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913, the admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. U.S. economic growth during its protectionist era was driven more by its abundant natural resources and openness to people and ideas, including large-scale immigration, foreign capital, and imported technologies. While tariffs on manufactured goods were high, the country remained open in other respects, and much of the economic growth occurred in services such as railroads and telecommunications rather than in manufacturing, which had already expanded significantly before the Civil War when tariffs were lower.

Great Depression and Smoot–Hawley Tariff (1929–1933)

Further information: Smoot–Hawley Tariff Act

The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff, is considered one of the most controversial tariff laws ever enacted by the United States Congress. The act raised the average tariff on dutiable imports from approximately 40% to 47%, though price deflation during the Great Depression caused the effective rate to rise to nearly 60% by 1932. The Smoot–Hawley Tariff was implemented as the global economy was entering a severe downturn. The Great Depression of 1929–1933 represented an economic collapse for both the United States—where real GDP declined by about 25% and unemployment exceeded 20%—and much of the world. As international trade contracted, trade barriers multiplied, unemployment increased, and industrial output declined worldwide, leading many to attribute part of the global economic crisis to the Smoot–Hawley Tariff. The extent to which this legislation contributed to the depth of the Great Depression has remained a subject of ongoing debate.

Irwin argues that while the Smoot-Hawley Tariff Act was not the primary cause of the Great Depression, it contributed to its severity by provoking international retaliation and reducing global trade. What mitigated the impact of Smoot-Hawley was the small size of the trade sector at the time. Only a third of total imports to the United States in 1930 were subject to duties, and those dutiable imports represented only 1.4 percent of GDP. According to Irwin, there is no evidence that the legislation achieved its goals of net job creation or economic recovery. Even from a Keynesian perspective, the policy was counterproductive, as the decline in exports exceeded the reduction in imports. While falling foreign incomes were a key factor in the collapse of U.S. exports, the tariff also limited foreign access to U.S. dollars, appreciating the currency and making American goods less competitive abroad. Irwin emphasizes that one of the most damaging consequences of the Act was the deterioration of the United States' trade relations with key partners. Enacted at a time when the League of Nations was seeking to implement a global "tariff truce", the Smoot-Hawley Tariff was widely perceived as a unilateral and hostile move, undermining international cooperation. In his assessment, the most significant long-term impact was that the resentment it generated encouraged other countries to form discriminatory trading blocs. These preferential arrangements, diverted trade away from the United States and hindered the global economic recovery.

In a November 2024 article, The Economist observed that the Act, "which raised average tariffs on imports by around 20% and incited a tit-for-tat trade war, was devastatingly effective: global trade fell by two-thirds. It was so catastrophic global trade fell by two-thirds. It was so catastrophic for growth in America and around the world that legislators have not touched the issue since. 'Smoot-Hawley' became synonymous with disastrous policy making".

Economist Paul Krugman argues that protectionism does not necessarily cause recessions, since a reduction in imports resulting from tariffs can have an expansionary effect that offsets the decline in exports. In his view, trade wars tend to reduce exports and imports symmetrically, with limited net impact on economic growth. He contends that the Smoot–Hawley Tariff Act was not the cause of the Great Depression; instead, he sees the sharp decline in trade between 1929 and 1933 as a consequence of the Depression, with trade barriers representing a policy response rather than a trigger.

Economist Milton Friedman argued that while the tariffs of 1930 caused harm, they were not the main cause for the Great Depression. He placed greater blame on the lack of sufficient action on the part of the Federal Reserve. Peter Temin, an economist at the Massachusetts Institute of Technology, has agreed that the contractionary effect of the tariff was small. Other economists have contended that the record tariffs of the 1920s and early 1930s exacerbated the Great Depression in the U.S., in part because of retaliatory tariffs imposed by other countries on the United States.

Reciprocity period (1934–2016)

The Great Depression led to a political realignment following the Democratic victory in the 1932 election. This election ended decades of Republican dominance and initiated a period of Democratic control over the federal government that lasted from 1933 to 1993. The realignment shifted influence toward the party that prioritized export-oriented interests in the South. Consequently, the focus of trade policy moved from protectionism to reciprocity, and average tariff levels declined significantly. During this period, there were 30 sessions of Congress, with 16 under unified government (15 Democratic, 1 Republican) and 14 under divided government. Over these 60 years, the overarching goal of promoting reciprocal trade agreements remained largely unchanged, including during the two-year span (1953–1955) when Republicans held unified control.

Following World War II, and in contrast to earlier periods, the Republican Party began supporting trade liberalization. From the early 1950s through the early 1990s, an unusual era of bipartisan consensus emerged, during which both parties generally aligned on trade policy. This occurred during the Cold War, when foreign policy concerns were prominent and partisan divisions were subdued (Bailey 2003).

After the 1993 vote on the North American Free Trade Agreement (NAFTA), Democratic support for trade liberalization declined significantly. By that time, the two major parties had effectively reversed their positions on trade policy. This shift in party alignment primarily reflects changes in regional representation: the South transitioned from being a Democratic stronghold to a Republican one, while the Northeast became increasingly Democratic. As a result, regional views on trade policy remained largely consistent, but the parties came to represent different geographic constituencies.