How the U.S. has used tariffs through history — and why Trump is different

President Donald Trump imposed broad tariffs on China on Tuesday, while tariff threats hang over other major trading partners like Canada, the European Union and Mexico.

That may lead some to wonder: How have tariffs been wielded through U.S. history, and is Trump unique in his use of them?

But things changed after the Civil War, Irwin said. The U.S. started to impose other taxes, like excise taxes, that made the nation less reliant on tariffs.

Tariffs generated about half of federal revenue from about 1860 to 1913, when the income tax was created, Irwin said.

The scale of the government expanded significantly in the 1930s — with the creation of New Deal programs like Social Security — and later for defense spending during WWII and the Cold War, said Kris James Mitchener, an economics professor at Santa Clara University who studies economic history and political economy.

Today, “tariffs simply cannot raise enough revenue to fund government expenditure,” Mitchener said. “There’s no possible way you could support the size of the U.S. military on tariff revenue.”

From the Civil War to the Great Depression, the U.S. primarily used tariffs as a restrictive measure on imports, to insulate the domestic market from foreign competition, Irwin said.

For example, the Tariff Act of 1930, popularly known as the Smoot-Hawley Tariff, levied protective tariffs on roughly 800 to 900 different types of goods, accounting for about 25% of all goods imported to the U.S., Mitchener said.

The U.S. helped create the General Agreement on Tariffs and Trade in 1948, the precursor to the World Trade Organization, which set global rules for trade and ushered in an era of low tariffs.

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That said, the U.S. also used tariffs as a reciprocal bargaining chip before WWII.

For example, before the U.S. annexed Hawaii, it signed a free-trade agreement with the Kingdom of Hawaii in 1875. The treaty allowed for duty-free imports of Hawaiian sugar and other agricultural products into the U.S. In exchange, the U.S. got exclusive access to the harbor that would later be known as Pearl Harbor.

But Democrats — then known as the political party of free trade — had an enormous majority around the New Deal era and passed the Reciprocal Trade Agreements Act of 1934, granting the president the right to negotiate tariffs in certain cases, Cohen said.

“That’s when the president gains a much more substantial authority,” Cohen said.

That power accelerated after 1948 during the “transformation of the whole global economic order,” he said.

That said, Trump’s use of tariff policy is “very unusual” among modern U.S. presidents, Cohen said.

For one, Trump “likes all three Rs” — revenue, restriction and reciprocity, Irwin said.

For example, on the campaign trail, he suggested that tariffs could replace the U.S. income tax to fund the government. He said during his campaign that they would create U.S. factory jobs and has threatened to use them to strongarm Denmark to give up Greenland.

However, there are tradeoffs, Irwin said. For example, restricting imports somewhat negates tariffs’ ability to raise revenue, because it diminishes the tax base for tariffs, he said. (Those additional duties may cause companies to import less or push people to buy less, for instance.)

“You can’t really achieve all three objectives at same time,” he said.

Additionally, no previous president has tried to link a U.S. drug crisis to trade policy, as Trump did with fentanyl.

“That’s a novel take,” Mitchener said.

Many presidents have used tariffs. For example, George W. Bush, Ronald Reagan and Richard Nixon applied tariffs to protect the U.S. steel industry, as Trump did in his first term, Irwin said.

“What’s unusual about Trump is, he’s not just picking out particular industries that he thinks are of strategic importance, but he’s blocking imports across the board almost with some of these countries,” Irwin said.  

Trump imposed a 10% additional tariff on all Chinese goods, for example, and threatened a 25% tariff on imports from Canada and Mexico.

“No president in recent memory has really used tariffs across the board or in a broad-brush way to achieve various objectives,” Irwin said. “They’ve sort of adhered to the rule that we belong to the WTO. That means we keep our tariffs low as long as other countries keep their tariffs low.”

Cohen agreed.

Global trade treaties, like the United States-Mexico-Canada Agreement (USMCA) Trump signed in his first term, establish a mechanism for nations to file grievances for alleged unfair trade practices, Cohen said. Nations can generally raise tariffs as a retaliatory measure if trade rules are breached, per the treaty terms, he said.

Trump’s recent unilateral tariff announcements are unique in this regard, he said.

“I can’t think of any precedent for that,” Cohen said.

“While the executive branch was given much more power since 1934, it’s always been subject to the specific terms of the agreements,” he said.