History has shown the potential dangers of imposing tariffs and restricting trade, according to a U.S. economist, who cited how such measures in the past have stoked divisions and even ignited internal conflict in the United States.
Steve Hanke, a professor of applied economics at the Johns Hopkins University, told the China Global Television Network (CGTN) of the dangerous historical precedent that has come from tariffs, noting the troubled outcomes which have arisen in the past.
American politicians often turn to tariffs as a tool to generate wealth and protect local industries, and current U.S. President Donald Trump has again been pursuing such policies since returning to office last month as he pushes his so-called "America First" agenda.
However, Hanke warns they may have forgotten that tariffs have historically backfired and even acted as a catalyst for revolution -- whether it be the 'Boston Tea Party' incident in 1773, which ignited the American Revolutionary War, or the 'Tariff of Abominations' in 1828, which deepened the North-South divide and set the country on the path to the Civil War.
Hanke noted the chain of events which transpired back in late 1773, when over 300 chests of tea on board three merchant ships of the British East India Company were thrown into the sea by the Sons of Liberty political organization in protest against the British government's tea taxation which forced America – then a colony of Britain – to pay import taxes on the tea they never agreed to. The harsh response from the British government inflamed the resistance, setting the stage for the American Revolutionary War.
The economist then explained the detrimental impact of the 'Tariff of Abominations' in 1828, which were originally imposed on imports but later caused a huge nationwide split, and were later named as such in order to reflect the damage they caused.
"It was a very complicated mess and was a North-South split, because the protectionists that wanted high tariffs were in the North and the Southerners wanted free trade. They were mainly trading agricultural products, cotton and other agricultural products. So, they wanted free trade. And the dividing line was really rather remarkable between the South voting against the tariffs and the North voting for. And tariffs, by the way, in 1830, two years after the Tariff of Abominations came in, they reached the peak of 62 percent, so they were very high tariffs," said Hanke.
He also noted that the emergence of slavery during the Civil War masked deeper economic divisions which were initially fueled by the tariffs.
"The kind of headline feature of the Civil War was slavery, but actually it was economic and it was set up, as you can see, about 30 years before the Civil War actually started," he said.
Trump on Monday raised tariffs on all steel and aluminum imports to 25 percent, saying there would be no exceptions.
It came after he announced tariff increases on Canada, Mexico and China earlier this month, before later delaying their implementation on the first two countries.
Economists have long warned of the negative impact brought by Trump's trade measures. A study published in 2019 by the Federal Reserve Bank of New York showed that the widespread tariffs imposed during Trump's first tenure, including those on steel and aluminum, as well as tariffs on Chinese goods, along with the countermeasures they triggered, led to a loss of manufacturing jobs in the United States.
Economist warns of dangerous historical outcomes of US tariffs
