What Is The History of US Tariff Policy?

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The United States has had three eras of tariffs and trade policy. Dr. Michael Stanaitis: Faculty page https://www.american.edu/sis/faculty/stanaiti.cfm LinkedIn https://www.linkedin.com/in/mrstanaitis/ Bluesky https://bsky.app/profile/profstanaitis.bsky.social Michael's framework for understanding Trump's 2.0 tariffs: https://www.american.edu/sis/news/20250129-analyzing-trump-tariffs-2-0.cfm Douglas A. Irwin https://economics.dartmouth.edu/people/douglas-irwin Subscribe for more like this https://www.youtube.com/TheDailyConversation/ Watch Part 1: What is a tariff? https://youtu.be/7gMNaDNHxqA What U.S. History Reveals About Trump's Extreme Tariffs 0:00 Three eras 0:15 Era 1: Founding to Civil War 0:27 Era 2: Civil War to World War I 0:37 Post-World War II Modern Era 0:49 World Trade Organization 1:19 Trump's reciprocal tariffs 1:35 Benefits of Free Trade 2:05 Communities left behind by modern system 2:58 Result: A more isolated America 3:21 Deconcentrated global economy 3:31 Nixon's blanket tariffs 4:32 US is smaller share of global economy A tariff is a tax that a country places on another country's imports. In the U.S., what that means is that when we place an import tariff, it's not another country paying the US government. It is a domestic firm, a domestic importer that's that's paying the US government. The Treasury Department is where tariff policy is established and it's implemented by Customs and Border Protection. And so that's why sometimes you'll hear them called import duties or import taxes. That's where you get the government revenue from tariffs. So we've got three categories tariffs as industrial policy, tariffs as economic statecraft, and then tariffs as political theater, right. Tariffs as industrial policy. The point is to put those in place, and largely for them to stay in place, because it's to restrict imports from other countries. And just this week we had steel and aluminum tariffs go in place. We've also had, earlier in January and February, two tranches, 10% of tariffs put against China. The sense is that those are there to stay, that those are long term sort of policy decisions. And that is an attempt to not just balance trade with China, but also try to bring steel and aluminum manufacturing back to the United States. When we're thinking about the three dimensions of tariffs, so their breadth, how many countries they're applying to their scope, how many industries and then their duration, how long. We'd always expect tariffs as industrial policy to have a variable breadth. It depends on whether you're just targeting China or you're saying an entire industry, right? A variable scope, but a long duration. So let's talk about economic statecraft. And this is sort of using tariffs in the same way we've traditionally used economic sanctions to extract concessions from other countries, maybe completely unrelated to trade. So if we think about Trump tariffs against Canada and Mexico, the official claim from the administration is that these are about migration and fentanyl. And that's why they're emergency tariffs that are placed for sort of these emergency national security reasons. And those seem more clearly to extract some kind of concessions, at least officially, right, in terms of how they've been implemented through executive order. And so the idea with tariffs is economic statecraft is, again, they're going to have a variable scope, whether they're focused on many industries, or just one. But it's going to have a narrow breadth. And the idea might be not to even have to apply them at all. I've been relatively unsurprised that so far we've seen this off again on again with, tariffs against Canada and Mexico, because in as much as they are economic statecraft, you're sort of not wanting to apply them, at least for the long term, and you're wanting to see whether you can extract those, those concessions that may have very little to do with trade. So political theater, I think in terms of scope, breadth, duration, the jury's out on that, right? Is Trump trying to impose these tariffs to extract concessions from other countries that are of key national interest? Because I think tariffs as political theater can look a lot like tariffs as economic statecraft. Or is this really an attempt by Trump to claim victory, save face, appear strong, perform the identity of still a strong US economic superpower? And, and I, personally, I would argue that a lot of what we've seen thus far, which then does not break terribly with Trump's practices in the past even in his first term, is tariffs as a political theater. And I mean, the ideal case study there is he threatened tariffs against Colombia when Colombia said they would not accept deported migrants, in handcuffs. And then Trump threatened to put 25% tariffs on all of Colombia's exports to the United States and very quickly back down. But at the end of the day, does it actually serve any national material security interests?