Trade tariffs through time: Have they ever been successful?
US president Donald Trump made several sweeping announcements on 2 April 2025 – dubbed “Liberation Day”. Tariffs have dominated headlines ever since.
President Trump had already imposed several tariffs during his first term. And when he was sworn in for a second time in January 2025, he emphasised plans to introduce further tariffs, initially on China, Mexico, and Canada.
In his announcements on 2 April, he outlined plans to introduce a 10% baseline tariff on all imported goods, with higher rates for certain nations and goods.
This prompted an instant flurry of reciprocal tariffs, followed by the US pressing pause on some of its plans. Almost-daily announcements and changes have made it hard to process the potential outcomes. And in an unexpected move, the US Court of International Trade ordered an immediate block on the tariffs, with the United States Court of Appeals for the Federal Circuit temporarily lifting the block as it considered an appeal.
As the tariffs have created waves of global unease and market volatility, escalating trade wars and widening international division, it might be difficult to understand what the merits are, if any.
But tariffs are nothing new. They’ve been around for centuries. Read on to discover why they are used, and whether they have been successful over time.
Trade tariffs are a tax on imports, designed to boost domestic industries
Rewinding briefly back to basics: what is a tariff? Essentially, it’s a tax on imported goods and services. Producers responsible for paying these taxes frequently pass these costs onto customers in the shape of higher prices.
Tariffs can also discourage domestic firms from buying imports, resulting in more home-produced products.
Most governments impose tariffs in order to protect their own industries, especially in the face of competition from nations with questionable labour practices, as well as to raise revenue.
Tariffs are also an indirect means of negotiation with the foreign government in question. The BBC reports that President Trump sees his heavy tariffs on China, Mexico and Canada as being a response to concerns about illegal immigration and drug trafficking.
However, tariffs imposed on imports can still impact domestic products, if they are part of a supply chain, for example. This can result in domestic goods still being more expensive to produce, with costs then passed onto consumers.
And, as has been the case recently, retaliatory tariffs are often imposed once a country has taken the initial step, which can then reduce demand for their exported products.
So, while the US government has taken the tariff approach as part of its commitment to protecting its domestic industries, this isn’t a move without risks.
The Corn Laws: protecting farmers at the expense of free trade?
As industrialisation took hold in the 19th century, tariffs formed an important part of economic policies, with nations fiercely protecting their developing industries (known as “protectionism”).
While this had the desired effect of supporting domestic industries, the flip side was that new technologies and developments were not shared. Consumer choice was also limited.
One of the most well-known tariffs in the UK is the Corn Laws. These were imposed in 1815 after the Napoleonic Wars, as Britain began importing goods again from Europe. The Corn Laws were designed to protect British farmers and landowners by placing tariffs on grain imports.
However, this made imports expensive even when food supplies were scarce. There was strong opposition from certain factions, proponents of free trade who felt the Corn Laws were protecting the landed gentry while forcing citizens to pay for more expensive goods.
The Corn Laws were ultimately repealed in 1846, when Britain urgently needed new food supplies. According to the National Bureau of Economic Research, this move benefited the bottom 90% of income earners who were spending a disproportionate amount of their income on food, only negatively impacting the top 10% of income earners.
The Smoot-Hawley Tariff Act sparked a significant decrease in global trade
Another infamous tariff was the Smoot-Hawley Tariff Act of 1930 in the US. This imposed tariffs on over 20,000 imports, and was designed to protect American interests during the Great Depression.
However, retaliation from trading partners was instant. According to the Corporate Finance Institute, it led to a 65% drop in global trade over the four years the legislation was in effect.
This devastating impact led to a rethink in long-term trade policy, with the Reciprocal Trade Agreements Act 1934 seeing the US negotiating trade agreements with other countries, based upon reciprocal tariff reductions.
The General Agreement on Tariffs and Trade (GATT) was signed by 23 countries, in a bid to reduce tariff rates and encourage free trade of goods.
It was succeeded by the World Trade Organization (WTO) in 1995, which expanded its remit into services, intellectual property and dispute resolution, as well as encompassing a broader range of countries and economies.
Tariffs in the modern day remain a catalyst for shifts in global trading activities
Moving into the 21st century, and tariffs once again become part of the US trade policy, with the first Trump administration introducing them on a range of imports. These focused particularly on China, stressing the need to address trade imbalances.
This brings us to the present day, with the raft of new tariff announcements leading to further fears of global trade unrest and supply chain implications.
Get in touch
If you’re worried about how tariffs might affect you personally, such as through increased prices for food, goods or energy bills, we’re here to help.
Email us at info@harperlees.co.uk or call 01277 350560 to find out more, and we’ll be very happy to help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.