Roots of Protectionism

The key to understanding America’s tariff history is that it didn’t start with Donald Trump. Arguments over economic tariffs, their pros and cons, and especially the resistance to them, are woven into the nation’s fabric.

It’s often said the United States was born in revolution, but it’s just as often forgotten that the revolution actually began with a dispute over tariffs. A critical precipitating factor leading to 1775 was the Townshend Act, passed by Britain’s parliament in 1767 to assert its authority to tax and regulate trade with the American colonies under the prevailing mercantilist system. More specifically, it was one of a series of revenue measures aimed at compelling the colonies to help offset the expenses of the French and Indian War (1753-63) and contribute to the maintenance of the British empire in North America.

The Townshend Act, named for King George III’s partying Chancellor of the Exchequer Charles “Champagne Charlie” Townshend, took the form of customs duties, referred to as “external taxes,” levied on colonial imports of certain English-manufactured goods and (most importantly) on the East India Company’s Chinese tea. Resistance to it produced an American boycott of imports from the mother country under the cry “No taxation without representation.”

The resistance movement reached full expression with the famous Boston Tea Party, when colonial importers ceremoniously dumped the offending product into Boston harbor rather than pay the king’s tariff.  The royal response and its upshot are well known — Britain’s disciplinary Coercive, or “Intolerable,” acts, followed in short order by the First Continental Congress and, ultimately, by the Revolutionary War itself.

There’s a point to this lengthy aside. The British government’s hated and counterproductive impost on tea was maintained, at a provoked George III’s personal insistence, to establish an imperial principle: We (the Crown) have the right to tariff you, if and when we want. In this respect, it anticipated the Trump government’s arbitrary and subjective tariffs of two centuries later. I, asserts the president, can unilaterally tariff anyone for any amount at any time.

The Economist (8/9/25) calls the new Trumpian bilateral system of constant and threatening tariff negotiations a product of presidential “whim” or “imperial preference”; that is, import rates vary according to which country the goods come from and how the rate setter (the chief executive) feels about that country at any given moment. (By contrast, the previous, upended system was multilateral and stable; it applied the same tariff rate on most products regardless of origin.). Like George III’s tariff on tea, Donald I’s arbitrary tariffs are as much political as economic.

On another level, though, the Trump tariffs, like the king’s, are very economically oriented — in a perverse way. George III’s tea tariff sought to put money into the pockets of England’s financial elite, the charter members of the empire’s leading private joint-stock trading company, the British East India Company. In 1773, British authorities re-ignited the simmering boycott struggle by passing the Tea Act, allowing the East India Company to benefit at the colonists’ expense by becoming its own exclusive exporter to the colonies. By eliminating the middlemen, American shippers who had traditionally purchased and transported the company’s tea across the Atlantic, this favoritism, which precipitated the tea party, not only bailed out the financially troubled E.I. Co., but gave it an invaluable monopoly, outraging Americans.

Jump ahead 250 years. In 2025, Donald Trump has used his own co-opted control of tariffs to reward America’s economic elites; namely, the ultra-wealthy, who stand to benefit from a shifting of the revenue base away from the upwardly graduated income tax and toward reliance on a tariff-generated national sales tax; and the big manufacturers, who will be able to charge more for products that are shielded from foreign competition.

The Trump vision (rewarding the upper classes) has long been the unspoken aspirational function of the protective tariff going back to Alexander Hamilton’s time.  After the Revolution, America quickly developed its own native commercial-industrial plutocracy, which used the tools of political conservatism, among them the tariff, to advance its economic interests. 

Broadly speaking, the successive conservative parties (the Federalists, Whigs and Republicans) were pro-tariff, while the lone liberal party (the Democrats) was anti-tariff.  Except for brief Democratic interregnums (1833-61, 1913-21), the country trended toward high-tariff protectionism until the 1930s, especially as it industrialized and fell under the sway of big business following the Civil War and the demise of the trade-oriented agricultural South.

Protectionism, the use of tariffs to protect big producers rather than just raise government revenue, achieved total dominance under the long Republican ascendancy that began in the 1860s.  Import duties, which had averaged 20% under low-tariff Democratic administrations, surged to 47% by the end of the Civil War and then to 57% under the Gilded Age Dingley Tariff (1897) signed by William McKinley, Donald Trump’s model president.

William Jennings Bryan, who ran against McKinley in 1896, revealed what surreptitiously motivated the protectionists: “The purpose of the tariff is, first, to make the consumer in this country pay the tariff upon the imported article; second, to make the consumer … pay a like amount for the home-made article … for upon no other theory can the tariff be a benefit to the home producer.”

But what finally undermined the acceptance of high tariffs were the events of the 1920s and immediately afterwards. Republicanism’s so-called New Era, endorsed by the triumvirate of Harding, Coolidge and Hoover, delivered the Fordney-McCumber Tariff of 1922 and the Smoot-Hawley Tariff of 1930, and with them a return to the stratospheric impost levels of the late Gilded Age — the highest of the 20th and 21st centuries until the era of Trump.

Both tariffs were premised on the notion that other countries were economic enemies whose products must be blocked or charged dearly for access (also the Trump position), that unless American exports exceeded foreign imports, America was losing an international competition. Then as now, the U.S. declared economic war on the world.

The immediate results were curtailed foreign trade, increased domestic monopoly, and widespread foreign antagonism.  In the longer run (after 1929), they included a deepened Great Depression and a delayed recovery, as retaliatory tariffs and import quotas overseas led to a global trade war and mutually assured commercial destruction — until Roosevelt’s New Deal called an eventual halt.

History records that the advantage-seeking GOP tariff men achieved nothing, but theirs is the dead-end road we’ve once more embarked upon in 2025. Call it a lesson unlearned.

[Next Time: Cordell Hull and Liberalized Trade]

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.