Last week, the US imposed tariffs on an unprecedented scale, targeting more than 180 countries. China, in particular, was hit with a staggering 145 percent tariff on its exports to the US

In response, Beijing retaliated by imposing 125 percent tariffs on American exports to China—reinstating the rate initially introduced by the Trump administration before it was raised to 145 percent last Thursday. This defiance by China, aimed at a global superpower, is part of a measure not seen in decades.

In the face of Beijing’s defiance and fierce criticism even from his allies, Trump backed down, initiating a 90-day pause to all tariffs except China and decreasing most tariffs to 10 percent. 

“The main motivation for Trump’s new policies is political rather than economic. The US administration’s rhetoric actually makes that quite clear,” a senior adviser at a Turkish government financial monitoring body, requesting anonymity due to the sensitive nature of his role, tells TRT World.

While Trump’s tariffs levied against both friends and foes are the highest the US has not seen in over a century, many American presidents and congressional leaders have long considered them useful tools serving various economic and political objectives of American governance for nearly 250 years.

In the late 18th century, at the birth of the United States, the Founding Fathers considered tariffs essential for generating revenue in an age when the new state had no real taxes to collect from its new citizens.  

From 1776, the year the Declaration of Independence from the colonial power Britain declared, to the years of the Civil War in the 1860s, tariffs accounted for nearly 90 percent of the US federal government revenue. 

While newly introduced taxes after the Civil War decreased the rate of tariffs in overall government revenues, they had still continued to account for at least half of state incomes until the early 20th century.

In the last seven decades, the role of tariffs for generating government income has significantly decreased, hovering around 2 percent of federal revenue.  

Founding Fathers as tariff defenders

Beyond financial purposes, early US leaders—from George Washington and Alexander Hamilton to Thomas Jefferson—viewed tariffs as tools for building an independent economic system, distinct from European nations, primarily Britain, which had dominated the American colonies for nearly 150 years.

“I use no porter or cheese in my family, but such as is made in America,” wrote George Washington in a letter to Marquis de LaFayette, a pro-American French military officer and politician. Washington, the country’s first president and leader of its War of Independence, supported domestic production over imports.

Like Washington, Alexander Hamilton—the first US Secretary of the Treasury—was a fierce defender of tariffs and subsidies that were essential for the development of domestic manufacturing, including arms production, and for national security.

As a result, not surprisingly, the nation’s second law enacted by the new US Congress was The Tariff Act of 1789 signed by Washington on July 4, the day when the Declaration of Independence was proclaimed, placing a 5 percent tariff on all imports to the North American state.

“A free people ought not only to be armed, but disciplined; to which end a uniform and well-digested plan is requisite; and their safety and interest require that they should promote such manufactories as tend to render them independent of others for essential, particularly military, supplies,” declared Washington, during his first annual address to the US Congress in 1790. 

Interestingly, Thomas Jefferson, a political rival of Washington, author of the Declaration of Independence, had an agreement with the nation’s first president on placement of tariffs to protect and back the country’s nascent markets against foreign competition. 

Jefferson wrote a letter to politician Benjamin Austin stating: “Experience has taught me that manufactures are now as necessary to our independence as to our comfort… if those who quote me as of a different opinion will keep pace with me in purchasing nothing foreign where an equivalent of domestic fabric can be obtained, without regard to difference of price.”

The letter was written in 1816 after the War of 1812 with Great Britain, which once again showed American leaders that they could not rely upon foreign help or weapons to defend themselves against external threats.

That same year, Congress passed a protectionist tariff law to shield American industries from British exports from iron products to wool and cotton textiles as well as agricultural goods. Eight years after this law, in 1824, another protective measure was imposed on increased import duties on foreign products.

Did tariffs trigger the Civil War?

Historians continue to debate whether tariff policies played a major role in escalating tensions between the industrial North and the agrarian South.

While the North had long advocated high tariffs to protect its native industrial facilities against foreign competition, the South was happy about cheap imports defending low tariffs. 

In 1828, the Congress passed another high rate tariff law, bringing up custom duties over 25 percent averagely, angering Southern Democrats, who disliked the act to a degree that they called it the Tariff of Abominations, further distancing them from the Northern industrial states. 

Even South Carolina, which was the first state seceding from the US in 1860 in an act, which would lead to forming the Confederation, unsuccessfully tried to nullify the law. But both sides found a compromise in 1833, reducing tariffs little over 20 percent. 

Until the late 1850s, US tariffs had been kept at lower levels under Southern Democratic domination of the Congress.

But the emerging Republican Party, advocating high tariffs, won the 1860 election. Abraham Lincoln—a strong supporter of protectionism—became president. Just two days before Lincoln’s inauguration, Congress passed the Morrill Tariff of 1861, which sharply raised import duties.

“Give us a protective tariff and we will have the greatest nation on earth,” Lincoln famously said. He defended that protectionist policies would benefit domestic producers and warned that rejecting them or adopting anti-protectionist measures would bring about the “ruin” of Americans.

“If a duty amounting to full protection be levied upon an article which can be produced here with as little labour, as elsewhere, as iron, that article will ultimately, and at no distant day, in consequence of such duty, be sold to our people cheaper than before, at least by the amount of the cost of carrying it from abroad,” wrote the former US president. 

While scholars and historians differ on whether tariffs directly caused the Civil War, many Southern voices at the time cited tariff disputes as a major cause for South’s secession from the Union.

Tariffs, Great Depression and Invention of Income Tax

Throughout the Reconstruction era after the Civil War, tariffs remained a central pillar of US economic policy. They supported the steel industry, agriculture, and textiles—helping the US emerge as a global leader in the Industrial Revolution by the 1880s.

Tariffs’ positive impact on American industrial development were nowhere more clear than the US steel industry, which increased nearly ten times from 1.25 million tons to more than 10 million tons between 1880s and 1900s.

US steel became crucial to building the national railroad network and was exported worldwide—including to Britain. During World War I, the US became the leading steel supplier to Allied forces.

While tariffs had continued to be a popular policy in Republican quarters and many parts of the US, high levies on foreign goods became a less important component of federal government revenues with the introduction of income tax in 1913. 

As a result, some Democratic Presidents like Woodrow Wilson, who introduced income tax and centralised the state’s banking system, were able to successfully argue to lower high tariffs with the Underwood Tariff of 1913. 

But after him, the Republicans again charged high tariffs, particularly coming up with the infamous Smoot-Hawley Tariff Act of 1930 to fight back the Great Depression. But this time around many countries retaliated to the US high tariff regime, which was around 20 percent, bringing the ongoing Great Depression into worse levels. 

The US retreated from high tariffs in the next the Reciprocal Tariff Act of 1934, which sided with a trade liberation philosophy advocating that in a global economy lower tariffs would lead to prosperity and growth. 

Since then, the US tariffs had been significantly lower until Trump’s recent protectionist measures. The US was also instrumental in forming the World Trade Organisation in 1994 to bring uniformity worldwide tariffs. 

Trump and return of Tariffs

President Trump’s tariff policies mark a sharp break from decades of bipartisan trade liberalization. His administration raised duties to levels not seen since the 1930s, despite warnings from economists.

Many economists draw parallels between the Smoot-Hawley Tariff Act and Trump’s recent tariff policies, warning that it might lead to a US recession, which can trigger a global economic crisis. Like President Herbert Hoover of the 1930s, Trump also took his tariff action against the advice of many economists and trade leaders. 

“US tariff rates are hovering at the level where they were in the 1930s. The parallel should caution policymakers worldwide. Meanwhile, global economic integration seems to be unravelling—and the Global South is positioned to pay the greatest bill,” Dan Steinbock, economist and writer, tells TRT World.