The History of Tariffs: Economic Lessons From The Past and Their Impact Today
- Connor Banks
- Mar 6
- 4 min read
Tariffs have long been a weapon wielded by those in power, wrapped in the rhetoric of "protecting national interests" while, in reality, punishing ordinary people. Now, as President Donald Trump’s latest tariffs on Canada, Mexico, and China come into force, history warns us what happens next: higher prices, lost jobs, and yet another economic squeeze on working people. While corporate elites will find ways to profit, it’s ordinary families who will be left footing the bill. This article explores the long history of tariffs, their economic impact, and what we can learn from past trade wars.
What Are Tariffs and How Do They Work?
A tariff is a tax imposed on imported goods, usually intended to protect domestic industries from foreign competition. Governments argue that tariffs encourage local production, but history shows they often lead to price increases, trade wars, and job losses.
Effects of Tariffs:
Increased prices for consumers.
Retaliatory measures from trading partners.
Disruptions to supply chains and global markets.
Higher production costs for businesses reliant on imports.
Tariffs and Power: A Tool for the Rich
The idea that tariffs help working people is one of the greatest economic deceptions of all time. Since the 16th century, ruling elites have used tariffs under the guise of economic protectionism, but their real beneficiaries have been wealthy industrialists and colonial powers. Britain, France, and Spain imposed tariffs not to defend their workers, but to enrich their empires, hoarding wealth while restricting economic mobility for the majority.
Historical Impacts:
Shielded the profits of domestic elites while keeping wages low.
Increased government coffers, but rarely redistributed wealth to the working class.
Fuelled economic resentment, from the American Revolution to modern-day trade wars.
The U.S. Tariff Policies: Dividing the Nation
America has always had an uneven relationship with tariffs. In the 19th century, protectionist tariffs benefited Northern manufacturers but devastated the South, which depended on cheap imports. The Tariff of 1828—nicknamed the "Tariff of Abominations"—lined the pockets of industrialists but crushed Southern farmers, leading to the Nullification Crisis as states revolted against Washington’s economic control. Later, the Morrill Tariff of 1861 helped fund the Civil War but exacerbated regional inequalities.
Key Consequences:
Cemented economic divides that contributed to the Civil War.
Made industrial magnates richer while rural workers suffered.
Exposed the lie that tariffs "help the country"—they help one side and cripple the other.
The Smoot-Hawley Disaster: A Lesson Never Learned
One of history’s greatest economic blunders, the Smoot-Hawley Tariff Act of 1930, was meant to "protect American jobs." Instead, it helped wreck the global economy. The U.S. raised tariffs on over 20,000 imports, triggering retaliation from other nations. The result? A downward spiral of economic nationalism that deepened the Great Depression.
Devastating Effects:
Global trade collapsed, with U.S. exports dropping 61% between 1929 and 1933.
Mass redundancies and factory closures wiped out jobs.
Cemented tariffs as an economic disaster that benefits no one but economic isolationists.
The Post-War Shift: Why the World Abandoned Tariffs
After WWII, world leaders realised that tariffs were a fast track to economic ruin. The General Agreement on Tariffs and Trade (GATT, 1947) and later the World Trade Organisation (WTO, 1995) sought to dismantle the protectionist barriers that fuelled past crises. Free trade agreements weren’t about corporate benevolence—they were an attempt to prevent another global collapse.
Economic Shifts:
Created an era of globalisation that, while imperfect, lifted millions out of poverty.
Industrialised nations flourished, but inequality persisted as corporations chased profits over fair wages.
Made economies dependent on international cooperation, raising the stakes of trade wars.
Trump’s Trade War: A Disaster in the Making
In 2018, Trump reignited the tariff war by imposing duties on $360 billion worth of Chinese goods. Predictably, China retaliated, hammering U.S. farmers and manufacturers. The working class paid the price, literally through higher costs on everything from groceries to cars.
Economic Fallout:
U.S. consumers were forced to absorb an extra $46 billion in costs annually.
Market uncertainty led to redundancies in farming and manufacturing.
Multinational corporations simply relocated, dodging tariffs while keeping profits intact.
The 2025 Tariff Plan: Who Pays This Time?
Fast forward to today. Trump has imposed 25% tariffs on Canadian and Mexican imports and hiked duties on Chinese goods to 20%. Once again, the sales pitch is "American jobs first." And once again, the real winners will be multinational corporations finding loopholes while working families struggle.
Immediate Effects:
The S&P 500 and Nasdaq plunged, showing investor panic.
The Canadian dollar and Mexican peso tanked, increasing economic instability.
Canada retaliated with $107 billion in counter-tariffs, which will boomerang back on U.S. businesses and workers.
China added new restrictions on U.S. companies, disrupting supply chains.
Honda and other manufacturers have begun shifting operations—proving that corporations will adapt, but workers will suffer.
How Tariffs Impact Consumers and Workers
While Trump’s tariffs will undoubtedly make headlines, it’s the everyday consumer who bears the brunt.
The Price Hike Trap:
Groceries, electronics, and cars will become more expensive as import costs soar.
Businesses will pass tariff expenses onto workers, who already struggle with stagnant wages.
The Job Destruction Cycle:
Agriculture and manufacturing will take the biggest hit as retaliatory tariffs slash demand for U.S. exports.
Companies like Honda are shifting production, which means job relocations—not job creation.
Inflation and Cost of Living:
Tariffs act as a hidden tax, reducing real wages as the cost of living rises.
Workers will pay more for essentials while billionaires continue dodging taxes and exploiting cheap labour abroad.
Retirement and Economic Security:
Market instability from trade wars will devalue retirement savings.
Pensions and investment funds will take a hit as uncertainty spooks investors.
Key Takeaways: Who Really Wins?
Corporate Loopholes Keep the Rich Untouched – Large companies find ways to adapt, while small businesses and workers bear the cost.
Retaliation Is Always the Result – History proves that trade wars escalate, crippling the very industries tariffs claim to protect.
The Working Class Pays the Price – From higher grocery bills to job insecurity, tariffs always punish the many for the benefit of the few.
Protectionism is a Myth – Tariffs don’t "protect jobs"—they protect profits for the elite while leaving workers scrambling.
Conclusion: The People’s Response
If history has taught us anything, it’s that tariffs are a political distraction, not a solution. Today’s tariffs will hurt working-class people first and foremost—raising prices, jeopardising jobs, and weakening economic security. Workers, unions, and consumer groups must demand policies that truly support the economy—investment in public infrastructure, fair taxation on the rich, and a real industrial strategy that protects workers, not just profits. The fight against economic injustice starts here.