McKinley has been recalled to life after the unfortunate setback of a bullet to the chest in 1901. Trump has taken up the reigns of protectionism which had fallen to the wayside in the post-war order, and it has so far produced results, both good and bad, for the American economy.
We’re Going to Jackson(‘s Era)
The history of the tariff in the United States dates back to the first actions taken after the death of the Articles of Confederation; in fact, until the 16th Amendment, the tariff was the largest source of government income by far.
Alexander Hamilton, and the Federalist party at large, advocated for higher tariffs, not only to fund the federal government, but to spur the development of the nascent American industrial sphere.
One of Trump’s favorite presidents and a man whose portrait is featured prominently in the oval office, Andrew Jackson, was a staunch believer in paying down the federal debt with tariffs. Jackson increased the tariff to 38% on finished goods and 45% on raw materials to help pay down the debt. Granted, this nearly tore the nation apart during the nullification crisis, but it may help us to understand where Trump is coming from.
The GOP was founded as the party of tariffs as well. Lincoln increased the tariff and this largely remained the trend through the rest of the Republican dominated 1800s. Tariffs shrunk following both World War One and World War two, where agreements like Bretton-Woods meant that the US influence on the world was tied to free trade and lower restrictions.
Trolling Trudeau
Much of Trump’s intentions can be summed up as attempts to rile up countries he sees as weak on various things, and spur them to action to American benefit no matter the consequences to relations; Justin Trudeau is the prime example of this.
Trump’s feud with Trudeau began before the inauguration, with the President and Prime Minister bickering over joking overtures at making Canada the “51st State.” Underlying this joke, however, was a serious threat to hike tariffs to achieve drug-restriction related goals.
The Love-Hate With Mexico
Trump has always had a strange relationship with the ruling MORENA party in Mexico, fluctuating between brotherly highs and infuriating lows. Trump has both threatened to raise tariffs and described his affection for the President of Mexico and her policies.
Tariffs with Mexico have inherently been tied to immigration issues, especially the implementation of something similar to the “remain in Mexico” policy.
Europe
“3% or 25%” has been the basic concept for European tariff policy, wherein Europe would increase their spending on the military to 3% of their GDP or they would face an increase in tariff rates the likes of which have not been seen since Smoot-Hawley.
Steel and Aluminum tariffs have been increased to 25% percent to help instigate these changes, which have caused a round of consternation from the various EU nations. The funniest of these have been calls to return the Statue of Liberty to France, a matter which remains open at the time of writing this article. The serious consequence of this have been a reciprocal increase on Steel and Aluminum tariffs from the EU.
What does this all mean?
The full consequences of tariffs will be unclear for decades to come, as large economic decisions tend to be. Undoubtably, prices will rise in the near term as companies struggle to find cheaper sources of goods to send to the American consumer. However, the tariff can and has been used as a method of inspiring growth in specific industries. Reciprocal tariffs on light trucks from Europe during the “chicken tax war” in the 1960s lead the the American truck industry to blossom into the largest in the world.
The model of protectionism to spur economic development is clearly what the Trump administration is attempting to pursue, and, unlike what some of his critics would like to claim, is deeply rooted in American history.
China
Another potential consequence of the tariff, the potential loss of American influence worldwide, is a valid concern, especially amidst the world of a rising China. America risks losing soft power and allies with belligerent pursual of tariffs. Be that as it may, China also belligerently throws its economic power around with the same tactics as critics say Trump uses.
Canadian farm products, one of their largest categories of exports, now face a tariff from China which threatens to massively harm the Canadian economy. No commentator seems to remark how China is terribly destroying their international standing and blowing up the world order. It is perceived as a legitimate way for them to act in the world order based on what they desire through foreign relations.
A Tactic of Negotiation
This leads to the final point – tariffs as negotiation tactics. Sanctions have largely remained ineffective at actually precipitating change, as their stated intention of regime change have largely kept enemy regimes from negotiating to end them. However, tariffs remain a low-risk economic way to push states into friendlier positions without completely annihilating economies or destroying relations between America and other states. This method has already worked with Mexico, and will most likely continue to see fruit in Europe, where defense spending increases have become a commonly discussed topic across legislatures.
What remains to be seen is how multinational companies, and American industries will respond.
