www.youtube.com/etbpwithbrittgillette
Sunday, April 6, 2025
Trump’s tariff idea is consistent with every human society ever
“There has never been a fully global era without trade tariffs in recorded history.” –Grok
There is much debate about the probable economic impact of Trump’s newly imposed reciprocal tariffs. One camp says they’ll be beneficial; the other says they’ll be a disaster.
But what does history tell us of tariffs, and does the economic calculus of 2025 bear a resemblance to the past?
Governments taxing goods traveling through the territories they control is a very old practice. Tariffs have been recorded as far back as the 3rd and 2nd millennia BCE.
The rationale for and beneficiaries of tariffs differ from one era to another, but the purpose is always the same: To extract revenue and protect industries from competition.
Tariffs have been employed by every nation that could enforce them. Empires have been built around promoting, controlling, and protecting trade.
To avoid tariffs, alternate trade routes were established, merchandise was disguised/hidden, and, of course, bribes were paid to various government officials.
In the West, the Roman Empire, medieval states/nations, and the British Empire all used tariffs. In the United States, the Tariff of 1789 was one of the first policies enacted. It stipulated the rates and types of tariffs.
While American tariffs were kept relatively low in the first half of the 19th century, economic circumstances in the second half of the 19th century to the present day have resulted in significant change, for better or worse, to tariff rates and applications.
What of the economic calculus in 2025? A government’s revenue extraction and industrial protection are givens, but what about the producers of goods subject to tariffs?
The global era introduced unprecedented mobility for businesses when it comes to manufacturing locations. What’s the calculus for producers? It may be the following:
1. Does the value of access to the markets outweigh the access fee?
2. What alternative markets exist, and at what cost or logistics burden?
3. Are there advantages to regional markets?
4. Is relocation/expansion an option, and if so, what’s the cost-benefit analysis?
5. Is enduring the tariff until a change in an administration acceptable?
No doubt the debate will rage. Will it result, as Trump touts, in a golden age or, as others insist, a global economic implosion? Tariffs, as the record indicates, come and go.
Those with an overwhelming concern about the impact of Trump tariffs should not lose sight of the impact of the trillion-ton gorilla in the room.
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