Tariffs and trade wars: a history of economic warfare

Summary

History Extra Podcast: "Tariffs and Trade Wars: A History of Economic Warfare"

Release Date: April 1, 2025

Introduction

In the April 1, 2025 episode of the History Extra Podcast, host Matt Elton engages in a profound conversation with Frank Trentmann, Professor of History at Birkbeck University of London. The episode, titled "Tariffs and Trade Wars: A History of Economic Warfare," delves into the historical intricacies of tariffs and their role in shaping economic and political landscapes across centuries. As global headlines buzz with modern trade tensions, Trentmann provides a scholarly lens to understand these phenomena through the annals of history.

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I. Historical Roles of Tariffs: Revenue, Protection, and Retaliation

Frank Trentmann opens the discussion by tracing the origins of tariffs, highlighting their multifaceted purposes. He states, “[00:11] Tariffs were there right from the start. So we're in the late 18th century at that point. It was mainly as a revenue measure to bring in money into the coffers of the state” (Trentmann, 01:11). Beyond revenue, tariffs have been instrumental in protecting domestic industries from foreign competition and serving as tools for retaliation in international disputes. However, Trentmann underscores the inherent conflict in achieving these objectives simultaneously: “you can’t achieve these three goals simultaneously. They rule each other out, right?” (01:45).

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II. Tariffs as Discriminatory Taxes

Clarifying the nature of tariffs, Trentmann emphasizes their discriminatory aspect. “A tariff is a discriminatory tax,” he explains (03:05). Unlike non-discriminatory import duties, tariffs are specifically designed to favor domestic producers over foreign ones. This differentiation is crucial in understanding the political and economic motivations behind tariff implementations throughout history.

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III. The Agricultural Focus of Early Tariffs

Delving into historical applications, Trentmann notes the prevalence of tariffs on foodstuffs. “[04:21] In pre-industrial societies, the biggest group of interests is the farming lobby... the British corn laws, the purpose was to keep out cheaper foreign wheat and rye, to protect and in a way subsidize farmers at home.” The emphasis on agricultural products reflects the economic structures of early societies, where agriculture was the backbone of both the economy and political power.

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IV. Evolution of Tariff Targets: From Foodstuffs to Industrial Goods

As societies industrialize, the focus of tariffs shifts from basic foodstuffs to industrial products. Trentmann observes, “[05:35] With industrialization, industrial goods become much more important. That's ultimately where the workforce is, that's where wealth is created.” Modern trade wars, such as the current focus on steel tariffs, signify this evolution. However, he also reminds listeners of the historical significance of agricultural tariffs during crises like World War I, where food security became a matter of national survival.

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V. Comparative Historical Perspective: Current Tariffs vs. Historical Examples

Comparing contemporary tariffs to historical instances, Trentmann provides context on their relative severity and impact. “when William McKinley became president in 1897... his tariffs were higher, almost twice as high than Trump's right now, and they were on a much bigger range of goods” (08:20). He further discusses the infamous Smoot-Hawley Tariff of 1930-1931, which, despite widespread criticism, exemplified the extreme protectionist measures of the past.

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VI. The U.S. Trade Policy Legacy

Trentmann offers a nuanced view of the United States' historical stance on tariffs. Contrary to the belief that modern protectionism is unprecedented, he explains, “Over 200 years, the United States, for the most part of that, has been protectionist” (08:20). The post-World War II era marked a significant shift towards trade liberalization under frameworks like the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), promoting reduced tariff barriers and increased global trade cooperation.

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VII. Intellectual Influences: Friedrich List and Protectionism

Highlighting the role of intellectual thought, Trentmann introduces Friedrich List, a German economist whose ideas profoundly influenced protectionist policies. “[...] the man who probably had more influence in spreading protectionist ideas was a German, Friedrich List... he very much criticized British liberal economists... arguing that if two countries are trading with each other, they're rarely equal” (16:55). List's perspective underscored the power dynamics inherent in international trade, advocating for strategic protectionism to ensure national economic advancement.

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VIII. Political Implications of Tariffs: Democracy, Lobbies, and Group Politics

Tariffs have always been more than economic instruments; they are deeply entwined with political power and democratic processes. Trentmann elaborates, “revenues from tariffs have political consequences because tariffs benefit well-organized, powerful lobbies and interest groups” (19:43). Historically, groups ranging from farmers to women's organizations have rallied either in support or opposition of tariffs, influencing policy through advocacy and political mobilization. The debate over tariffs often mirrors broader struggles over economic policy and national identity.

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IX. Case Study: The U.S.-Canada Trade Relationship

Focusing on North American dynamics, Trentmann discusses the complex trade relationship between the United States and Canada. “[22:30] Canada is an interesting case... trade dependence on the US is particularly pronounced.” The historical context of imperial preferences and the struggle for Canadian trade autonomy illustrate how tariffs have been pivotal in shaping bilateral relations and national identity within the Commonwealth framework.

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X. Contemporary Shifts: Declining Political Salience of Tariffs

In the modern era, the political landscape around tariffs has transformed significantly. “[24:35] Tariffs and free trade occupy a different place in the political imagination... it's not a question of political identity or something that gets people onto the barricades.” Trentmann attributes this shift to several factors, including the expansion of state functions, diversified revenue sources beyond tariffs, and the globalization of trade negotiations to supranational bodies like the WTO. Consequently, public engagement with tariff policies has diminished, relegating them to the realm of expert and bureaucratic discourse.

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Conclusion: Understanding Tariffs in Historical and Modern Context

Frank Trentmann's insightful exploration offers a comprehensive understanding of tariffs beyond their immediate economic implications. By contextualizing current trade wars within a broader historical framework, he elucidates the persistent tensions between national interests and global economic integration. The episode underscores the importance of historical awareness in navigating contemporary economic policies, highlighting that while the mechanisms of tariffs evolve, their foundational roles in revenue generation, protectionism, and political leverage remain enduring.

Notable Quotes:

• “[...] tariffs were there right from the start. So we're in the late 18th century at that point. It was mainly as a revenue measure to bring in money into the coffers of the state” (01:11).

• “You can’t achieve these three goals simultaneously. They rule each other out, right?” (01:45).

• “A tariff is a discriminatory tax” (03:05).

• “Over 200 years, the United States, for the most part of that, has been protectionist” (08:20).

• “traders are rarely equal. The stronger one will use trade to advance their interests” (16:55).

• “the issue around tariffs or free trade is the issue around which they organize and often form their first big public political meetings” (19:56).

• “Tariffs and free trade occupy a different place in the political imagination and in political culture from that they used to in the early 20th century” (24:48).

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This episode serves as a valuable resource for historians, economists, and anyone interested in the intricate dance between trade policies and global power dynamics. By bridging past and present, Trentmann provides listeners with a nuanced perspective on the enduring relevance of tariffs in shaping our world.

Transcript

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[Matt Elton]

Welcome to the History Extra Podcast. Fascinating historical conversations from the makers of BBC History magazine. From US Tariffs on imports to threats of retaliatory action from other nations, there's been a lot of talk about trade wars in recent weeks. But can history offer up anything to enlighten the current situation? Matt Elton caught up with Frank Trentman, professor of History at Birkbeck University of London, to find out.

[Interviewer]

Frank, thank you so much for being with me today to talk about Texas tariffs and trade wars, subjects that have been in the headlines a lot recently. It's a fast moving situation. We're not here to talk about the current affairs side of it, but to look back at some of the history of this. What do you think is the earliest historical example that comes to mind when you've been reading these headlines?

[Frank Trentmann]

Well, states have always tried to control what goes in and out of their country, but it's perhaps worth mentioning in the current context that that actually the tariff is the first ever act of Congress passed by the United States. So you know, tariffs were there right from the start. So we're in the late 18th century at that point. It was mainly as a revenue measure to bring in money into the coffers of the state. And I think that's perhaps worth emphasizing that tariffs, we sort of refer to them generically. But tariffs can have many different functions. So revenue is one. The other is to keep out as much as possible foreign competition. So that's to boost producers at home. And the third is really for retaliation. So to use them as a negotiating tool to improve trade or other political relations. And the big problem. And that's why the current situation is so exciting. The big problem in history has always been you can't achieve these three goals simultaneously. They rule each other out, right? Because if you want to have revenue, it means some of the stuff has to come into your country otherwise the goods won't pay the additional tax on top of them. But that of course means you have some competition. So countries have come up with a whole range of different ways of trying to reconcile these three and to maximize, depending on the context, one over the other.

[Interviewer]

And is it right? Before we go any further, we should do some more defining of things. Is it right that despite trying to balance these three things, tariffs are always taxes imposed on goods and services yes.

[Frank Trentmann]

It'S important to make the point. A tariff is a discriminatory tax. So we need to distinguish between a regular import duty, which is not meant to be discriminatory, which can be matched with an excise tax. Right. So Britain, which was a free trade country in the Victorian period and all the way till 1931, of course had certain revenue taxes that were also on foreign imports, say port wine or sherry, but they were not designed to be discriminatory. A tariff has the specific purpose of giving your home producers an advantage over foreign producers trying to sell their goods in your market. So that's a big distinction. So even a revenue tariff will have explicitly a discriminatory function.

[Interviewer]

I think what's striking when I was looking back through at the history of tariffs is how many of them were food based. Does it tell us something that for so long that was the commodity that was being taxed in this discriminatory way?

[Frank Trentmann]

In pre industrial societies, the biggest group of interests is the farming lobby, so the people who grow the food. So in the British corn laws, the purpose was to keep out cheaper foreign wheat and rye, to protect and in a way subsidize farmers at home. So that makes good sense. The other thing to point out, of course, is you have, in addition to the big items like wheat, in the mercantilist era, which is an era of expanding empires in competition with each other and at war, these empires are trying to seal off their colonies and their home market from each other. So you're trying to protect your coffee producers and your tobacco producers and your sugar producers from foreign empires. And foodstuffs are the main bits that are circulating in these imperial zones.

[Interviewer]

When we chart how tariffs have been applied and trade wars have kicked off throughout the centuries, does it tell us something about the changing nature of the goods that are at the heart of them?

[Frank Trentmann]

We're currently dealing with steel, mainly. There is in return a threat by. Well, more than a threat by now, I mean, the EU is imposing duties on American goods. Those include drink and foodstuff. So your Jack Daniels bourbon will become more expensive in the European Union because of those duties. If we take a very, very broad view, with industrialization, industrial goods become much more important. That's ultimately where the workforce is, that's where wealth is created. And those are the levers that are being used in tariff wars. Having said that, it's worth remembering food. Wheat in particular is absolutely crucial, of course, for survival. So in the early 20th century, we still see major tariff wars over wheat. And in Europe, also pork battles between Germany and the Balkan countries. And then, of course, with the First World War, it goes up to a much higher level because food is now tied to the very survival of nations. So if we step back a little bit and look at the current situation, we're far, far, far away still from those dramatic times. I think the other thing we need to perhaps put into the picture is that in earlier periods, we're not just dealing with pre industrial societies. We're also dealing with societies where the state is quite small in terms of the economic and social activity of the state before the 20th century is quite limited. Now, that also means that the tax systems are fairly simple and basic compared to our own times. So income tax doesn't really come in until the late 19th century. So imports and taxes on goods in trade are a very important part of state revenue. If we fast forward to the second half of the 20th century and our own times, most states do not really rely on tariffs or import duties for their revenue. That's quite small now because you have income tax, you have inheritance tax, you have capital tax, you have all sorts of taxes, VAT and so forth. So relatively speaking, tariffs are more marginal from a fiscal and from an economic point of view than they used to be 100 or 200 years ago.

[Interviewer]

So is it right to see the fact that these tariffs are making such headlines as being a bit of a historical outlier?

[Frank Trentmann]

Well, they're an outlier if we take a view of modern political economy. Over 200 years, the United States, for the most part of that, has been protectionist. And indeed, it has been more protectionist than anything Trump is suggesting right now. So you mentioned the tariffs are 25% on particular items like steel. Well, when William McKinley became president in 1897, Republican President and Trump's idol, this is the president he renamed the highest mountain in Alaska after, again, McKinley's tariffs were higher, almost twice as high than Trump's right now, and they were on a much bigger range of goods. And similarly, the smoot Hawley Tariff, 1930, 1931, which hundreds of economists criticized and attacked, those were kind of blanket high tariffs, punitively high. So compared to that, we're in a much milder climate. What matters, however, is that of course, everyone's stunned by this and agitated because the tariffs come after, what, 70 years of trade liberalization. So after the Second World War, we get an international architecture of trade liberalization around the gatt, the General Agreement on Trade and Tariffs, and then the World Trade Organization. And in the course of those post war years, the United States is playing a crucial role in liberalizing trade relations. So tariff levels keep falling in the 50s, 60s, really all the way into the 2000s. And it's only really with 2016, 2017, when globalization turns backwards into de globalization. You have the first trade and tariff war between the United States and China that the trend is reversed. So if you have short historical memory, what Trump is doing is pretty dramatic because it just turns around the story that people had gotten used to in the last 60, 70 years. If you take a longer view and put the early 20th century and the 19th century and 18th century in it, this is perhaps a little bit less dramatic than people think.

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[Interviewer]

So perhaps rather than this being the outlier, it's that period in the middle that was a historical outlier. When you take that broad view, yes.

[Frank Trentmann]

Certainly I would argue that. I mean there are two big periods which are peculiar and exceptional. That's the mid Victorian era. So the mid 19th century when Britain ruled the waves, was the hegemon, sort of the most dominant political and economic power on the planet and initiated trade liberalization with the trade treaties first between Richard Copton and Chevalier, which triggered in a way a series of further treaties where more and more European countries adopted what's called the most favored nation Clause, which effectively means that if you give one country certain benefits, you automatically extend them to your other partners. So you had, in that mid 19th century period, for 10, 20 years, you had trade liberalization. And then came the first big world depression and a return to tariffs rising. And then the second period is the period after the Second World War when the United States effectively steps into the shoes of the British Empire and is now the hegemon, the economic superpower, military superpower and political superpower. And the United States pushes through and advances trade liberalization in the Cold War and after. So these are kind of two exceptional periods. They share certain properties, which is you have one dominant global power. And we, of course, as everyone listening to this will appreciate, in the last decade or so, we've moved further and further away from that because the global system now is increasingly torn between rival competing great powers, with the rise of China particularly, and, well, the resilience, let's call it that, of Russia.

[Interviewer]

So in some senses, is it right to see tariffs as being a symptom of that global and historical shift?

[Frank Trentmann]

I think so. And I think we need to sort of understand the significance of tariffs. We need to get away from a sort of simple economic look at trade barriers. For Trump, this is much more than that. For Trump, tariffs are an integral part of a territorial view of the economy. So the economy, in Trump's mind is the land of the United States and the resources and raw materials and the people in that land. So it's very much a territorial conception. And that means trade, exchange, trade is not seen as something mutually beneficial, but pretty much in a kind of textbook, simplified mercantilist view, it's a tit for tat. So in trade, there's always one winner and one loser. It's not that both benefit. The interesting thing one should add here is we shouldn't just think of that as an American perspective. I mean, the man who probably had more influence in spreading protectionist ideas was a German, Friedrich List, who lived in exile in the late 1820s, early 1830s, and supported then the protectionist campaign in American politics. And he very much criticized British liberal economists and thinkers who were arguing for the mutual benefits of trade. And Liszt's argument effectively was, well, if two countries are trading with each other, they're rarely equal. You have a stronger and you have a weaker partner, and the stronger one will use trade to advance their interests. So you may well get locked in as the smaller, weaker country in a development path that permanently will keep you at a disadvantage. So this is sort of an international, not just an American. It's a widespread international view of how the economy works and how the economy is tightly related to national security.

[Interviewer]

It's interesting you say that because you mentioned earlier the 25th US President, William McKinley. And I was going to ask you, following that, whether we should see this in any way as a story emblematic of the United States or that tells us something about the US and its history. Would you push against that then?

[Frank Trentmann]

There's one thing we need to add to the story of McKinley, because McKinley, while he introduced this very aggressive tariff regime, when he came into power a few days before he was assassinated, he had a little rethink and came to the conclusion that, damn, these tariffs don't really work so well. They hurt a lot of citizens and a lot of industries. And he had planned to wind back the tariffs. So this is also part of American history that you have a back and forth. So the type of trade regime you want is contested in American history from the day go, because everyone knows the story of the Boston Tea Party and how American patriots in their fight for independence and against the British Empire very much sponsored a view of economic nationalism. So making and wearing homespun local goods, abstaining from foreign imports like the tea that's dumped into the harbor. So there is this one conception of the American republic which is very territorial, self sufficient as far as possible. And against that you have a more liberal commercial faction and set of ideas that really is closer to liberal thinking in Britain and in Europe, where trade is mutually beneficial and ultimately you can only develop through intercourse with other countries and through specialization. So these two have always been in conflict. In the interwar years, you shift dramatically towards the protectionist side in the world recession of 29 to 32. But then under Roosevelt, the Secretary of State is Cordell Hull, and he takes up the baton of trade liberalization in the late 30s and early 40s and is very important in thinking towards an international architecture where trade agreements and trade liberalization can prevent the world from returning to the sort of beggar thy neighbor, as it was called, beggar thy neighbor, economic rivalry and nationalism and imperialism of the early 30s.

[Interviewer]

It's so interesting that amid these huge economic and historical sweeps, we've also got what seems to me like a push and pull of intellectual ideas between individuals operating on an international stage.

[Frank Trentmann]

Yes, I mean, these are not anonymous forces we're talking about, and they're not just economic interests or interest groups that matter. So for a long time, really from the late 18th to the early 20th century, the question of tariffs or free trade are big political issues. You have social movements that organize around them. For many marginal, excluded groups, such as women's groups in the British case, the issue over tariffs or free trade is the issue around which they organize and often form their first big public political meetings. So in the British case, the Women's Cooperative Guild, so the first independent political lobby, five women and four women. For them, the defense of free trade and the defeat of tariffs was really core to their feminist politics for a very simple reason. We've talked about the economic consequences, but tariffs also have political consequences because tariffs benefit well organized, powerful lobbies and interest groups. So many democratic defenders of free trade made the point that what really is at stake is an open, transparent, accountable, democratic political system. If you have tariffs, then lobbies will use Parliament to get a foothold and arrange the tariffs in a way that it benefits them at the expense of the consumers. And that around 1900, in the so called fiscal controversy, sort of the big fight between liberals on the one hand, and Joseph Chamberlain, who wanted tariffs and imperial preference on the other, this democratic argument was quite important. And it was around the free trade issue that working class groups, women's groups, and radicals and progressives made the argument that ultimately free trade protects the citizen because it treats everyone the same. No one is sort of favored. And that's very important for democratic trust and the functioning of democracy.

[Interviewer]

One dynamic we've not specifically honed in on is that of the U.S. canada relationship. Canada is one of those countries where there's been a lot of talk about how it might have a really big impact. And there's been lots of news stories about people in Canada not buying U.S. goods.

[Frank Trentmann]

Canada is an interesting case and there's a history to it. I mean, not just in terms of relations with the United States, but control over trade policy was hugely significant for Canada when it was a dominion. So one development we have in the course of the 19th century is that the white settler colonies are trying to assert more of their relative autonomy and sovereignty and trade, having control over trade policy and then ultimately foreign policy are very important stepping stones towards that. So in the years around 1900, one crucial question in the tariff debate was what would tariffs mean for the relations between Great Britain, the mother country, and particularly the dominions, as well as the colonies. And so imperial preference, as it was called, was meant to cement the relationship between Britain and particularly Canada and Australia as well, by giving Canada preferential treatment compared to foreign countries, completely foreign countries. So you had a kind of the idea Was you would have a kind of three layered tariff system where the whole market is completely protected and then you have preferential treatment for the dominions and colonial imports and then you have full tariffs against foreign countries. So Canada comes to that with tariffs being an important part of identity formation and formation of Canada as fully independent country. That's quite important. The other thing, of course, is that the trade dependence, Canada's trade dependence on the US Is particularly pronounced. So if you compare to most European countries, it's a multitude of that and that makes this particularly sensitive issue.

[Interviewer]

We've talked a little bit already about the way that if we look at this from a big historical perspective, we can see shifts in the politics, in the economics. Are there more recent shifts, I suppose that you think we should highlight here?

[Frank Trentmann]

Yes, I do think that tariffs and free trade occupy a different place in the political imagination and in political culture from that they used to in the early 20th century. So in the early 20th century, you know, you have these enormous political conflicts, popular conflicts over the tariff issue in Britain, but also say in imperial Germany, you have major upheavals caused by things like proposed tariff on meat. People now see certain foodstuffs as essential and whether they can be taxed and affected by tariffs is seen as a kind of life and death issue for personal well being, but also for the strength of the nation. So you have mass convulsions in these political systems. We're in a different world now. I mean, the newspapers report about the tariffs and people in Brussels get upset and so do British and continental European steel makers. But it's not that the consumers are out there in force in the streets and mass demonstrations. So I think one thing to appreciate and think about is that in the last hundred years, this issue of tariffs or free trade for many people, it has lost its political salience. It might, you know, people may not like it if the price of eggs go up or things like that, but it's not a question of political identity or something that gets people onto the barricades. Now why would that be? Well, one thing we've already mentioned is that the state itself is transformed in the last hundred years. So the state is much bigger. We have Social Security systems. So whether the price of bread goes up or not is not a matter of life and death really because you have cushions and state security system that absorbs it for the state itself. Also, tariffs are not that huge because there are other sources of revenue. But the other thing I think that's important what has happened is that, and here we go back to the post 45 era and the international system of trade liberalization is that trade politics moves up several levels, out of the local and the national to the supranational. So trade liberalization is discussed in the WTO through the World Trade Organization, but it's mainly discussed behind closed doors by experts and bureaucrats and so forth. It's no longer really part of national political culture to the extent that it had been in the years around 1900. So it's become bureaucratized in many ways. You occasionally have flames erupting. So the big protests against trade liberalization at the meeting of the powerful nations in Genova, for instance. So you have demonstrations by anarchist groups and by critics of globalization. And these are not insignificant, but they're not mainstream politics any longer.

[Matt Elton]

That was Frank Trentman speaking to Matt Elton. Frank is the author of books including Free Trade Nation and Empire of Things. Thanks for listening. This podcast was produced by Jack Bateman.

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