Contemporary voices tend to think history began in 1946, and ancient history began in 1900. Recent headlines scream about market turmoil, existential threats to globalization, and catastrophic trade wars—all couched in emotionally-charged language designed more to incite panic than foster understanding. Headlines such as "China vows to fight to the end" or "stocks plunge amid Trump tariff shock" obscure the complex reality that America has been here many times before. As a result, the world looks a lot scarier than it really is. I'd like to give some historical and economic context for recent events that will help everyone understand what's going on amidst a media cycle that has an excess of histrionic fervor and a lack of depth and context.
The US has had a number of protectionist regimes through its history, and many of them were far more potent than anything we're seeing out the Trump Administration.
In 1807, The Embargo Act effectively banned trade with Britain and France altogether. Considering that they were the biggest trader on earth at the time and the largest manufacturer, that would be like totally banning trade with China. This was done to pressure England and France to respect American neutrality during the Napoleonic wars. The embargoes ultimately led to tensions which culminated in the war of 1812.
In 1828, tariffs as high as 45–50% were implemented to protect Northern manufacturers. This "Tariff of Abominations" hit the South hard and sparked backlash - an early sign of sectional economic rifts that would deepen toward civil war.
In 1832, those tariffs were dropped to about 35% after the 1828 tariffs nearly resulted in armed conflict between the federal government and the state of South Carolina. That was considered a compromise, but they were still considered quite high.
It wasn't until 1846 that tariffs dropped somewhat and represented a shift away from protective tariffs to revenue tariffs, and even then they weren't lower than Trump's across the board tariffs today.
Protectionist tariffs in 1930 were blamed as part of the great depression, alongside many other factors -- in another essay I primarily point to loosening of lending standards due to the creation of the federal reserve bank in 1913 combined with the Stock-Raising Homestead Act of 1916 which allowed farms to be homesteaded on land that did not have access to surface water, which induced a farming boom buoyed by short-term climate shifts which caused an ecological and financial disaster once the climate returned to normal causing many farms to not just fail financially but to destroy the topsoil causing dust storms, and the high levels of debt the banks gave out that then couldn't be repaid caused bank failures and bank runs which changed the economic outlook.
In that case as you can see, the context is important: World War 1 had already created a sort of post-war situation where the Europeans found their continent destroyed and their population massively reduced, leaving the United States in a position to dominate global trade. In this unique context, protectionist tariffs were effectively a tax on the entire earth, particularly if they resulted in retaliatory tariffs that resulted in a pullback in global trade.
Some of these embargo or tariff regimes did in fact have recessionary effects, and tariffs were the cause of some recessions not attributable to the debt cycle.
Reality is that tariff based protectionism is complicated. On one hand, global trade does tend to result in higher overall growth, so low tariffs are good in that regard. On the other hand, it can also result in markets that are somewhat exploitative and extractive -- if we extract materials such as metals or agricultural output and ship it elsewhere for value-added processing, you almost end up with primary producers as colonial economies, only existing to enrich stockholders who are likely not even from this country (and in fact this practice of economies shipping out raw materials and shipping in finished goods has been called neocolonialism). It isn't a new idea -- Alexander Hamilton proposed a protectionist industrial policy in his Report on Manufactures as early as 1791, which recommended protectionist measures to protect against cheaper and more advanced British exports.
With tariffs being complicated, it's true that a lot of the instances above caused pain for Americans. The embargo act really hurt the US more than Europe. Industrial tariffs harmed the southern US and was likely one of the pressures behind the civil war, and the high tariffs in that period did absolutely cause a recession, as I've noted. However, it's also true that there were benefits for at least some Americans, with the US industrial base being reliant on early tariffs to compete with cheaper and more advanced British goods.
Another complicated piece of tariffs is that the different effects do not manifest at the same speed -- negative effects on global trade may manifest nearly immediately, but positive effects on domestic industry may take much longer to manifest, since acquiring capital, acquiring permits, building factories and machines, hiring employees, commissioning new plants, and getting new capital projects running at full operating capacity can take much longer.
Yet another wrench in the works is that a dollar of global trade eliminated by tariffs may not ever result in a dollar of domestic production -- there are a lot of mechanics in place, after all. That's one reason why libertarians such as the Mises institute focus on free trade, because a dollar you know you have is better than a dollar you might have if everything goes right.
"Free trade" as a dogmatic mantra in the United States is relatively new in concept, emerging largely post–World War II through GATT and WTO structures after it became practical in part because in the post-war period the United States dominated value-added industries like manufacturing because most of the rest of the world had been bombed into dust in two world wars. In a world where the United States is the only producer of most things, free trade effectively has a strong benefit without the cost we mentioned earlier. Whereas in the 1800s tariffs harmed southern farmers but benefited northern factories, if the northern factories were doing fine without any tariffs, then free trade is a no-brainer -- you effectively unleash the power of global trade to sell to the rest of the world without harming the bloc that would normally be harmed by such a policy. The thing is, it's only a reality that lasted for a certain period of time, and generations of people have been born since that time ended.
It's really important to see that -- choices ought to be made based on the circumstances, and circumstances change. The current moment isn't post-world war 1, it isn't post-world war 2. It's a world where the US isn't the dominant player by a country mile, it's in an even running with the EU and China, with India coming up from behind and looking to be a big player in the next generation due to demographic headwinds.
Like it or not, extractive versions of free trade are considered neocolonialism, and even when it results in regions that are wealthy for a while, eventually it sends the wealth elsewhere and someone else capitalizes on that wealth. For an example, North America was focused on building value-added industries early on, but South America was considerably more extractive. At first South America was considered wealthier since they were better capitalizing on natural resources, but today even a hollowed out America is still a more attractive place to live despite the fact that geographically, South America is still a place more suited to human flourishing for the most part, given how much of the US is desert or swamp, and how much of South America is dense and green.
People who think Trump's protectionist tariffs make no sense simply don't know about a big chunk of America. If you replace a union factory with a strip mall, it's cold comfort to say "the global GDP went up. You should be happy." -- workers don't get paid in GDP, only the state does, and shareholders also benefit to an extent, but at the cost of local communities. Perhaps cotton is grown in America, processed in China, clothing is manufactured in Bangladesh, packaged in Singapore, then shipped back to the United States -- and that's fine for global GDP and share prices, but no local communities benefit.
Honestly, I work in a region that's effectively the rust belt (I'm not in the US, but it's a similar geographical and economic region), and so I can see that some protectionism is actually warranted -- there used to be 5 paper mills in the city, now there's 1 barely sticking around. The city is like a girl who peaked when she was crowned prom queen, and all that's left is monuments to her former greatness, her sash hangs on the wall both gathering dust and slowly being bleached an unrecognizable color from the light cast through the windows of the bachelor’s apartment she shares with a girlfriend. There's an argument to be made for a reset that'll bring back what used to work here. There's a human cost to what's been stripped away -- lots of poverty; all the old commons infrastructure built in the glory days are slowly rotting and there's no tax base to recover them; massive amounts of drugs and violence and alcoholism and the deaths of despair; and the people in coastal boom towns tell the people who have been here for generations "you should just be more virtuous, like us" as if winning an economic coin toss actually makes you a better person. The people who can leave have left. The people who remain are the folks who were doing just fine shoveling shit and sweeping floors in the union plants and were never going to be doing engineering whether it's in a factory or in a data center.
Of course, one of the unwritten assumptions in all of my writing here is that the local community is something worth protecting. For some people, they think the only purpose of a community is to be cosmopolitan, and that the idea of laying down roots and building a community for generations is actually antithetical to the ideal. If you don't believe in sustaining local communities, then it's entirely possible to see everything I've written and decide it's worth letting the old prom queen stay in her bachelor's apartment because she should have moved to New York when she had the chance.
The bottom line here is that history didn't start in 1901, and there are a lot of examples of protectionist tariffs in the United States. Compared to those eras, the current tariffs by Donald Trump would even be considered relatively low. The post war situation of free trade between the United States and other countries was an aberration caused in part by extremely favorable conditions to the United States, but as the global economic system is normalized those assumptions may no longer be as important. That doesn't mean that tariffs are an entirely net good, or that they are entirely good for the entire country or entirely bad for the entire country, historically different economic blocs within the country had different opinions on the topic. All that being said, however, it should be obvious that the truth is more nuanced than protective tariffs simply being a stupid idea brought up by an idiot.
10% tariffs across the board are higher than recently, but not historically unprecedented at all (US average tariff rates exceeded 20% for much of the 19th and early 20th centuries). In fact, they're still historically quite low. The over 50% imposed on some Chinese products is historically quite high but even then not unprecedented since higher tariffs were imposed in the 1930s on specific products. It's a change in tariffs that we haven't seen in the postwar period, but not the worst attack on trade in US history as the Embargo act shows.
That being said, when the markets dominated by multinational companies drop precipitously, that's not an intended result, but as we can see from our long history, it is a predictable result, and it is not likely to be the only result. Protectionist tariffs will tank stocks in a market that has had free trade as dogma for generations since the companies that thrived were thriving based on that reality. That just means free-trade-aligned stocks are taking the hit—not that the long-term consequences will be negative. The overall outcome of April’s tariffs remains to be seen. Over time, if things are working as expected, a new equilibrium will result including permanently lower results for global trade, but permanently higher results for local value-added industries.
They might be, but most AAA games for many years just haven't been worth playing at all, much less forever.
Like 95% of my gaming is pre-pandemic.