Ancient Greece that provided security for transportation of goods. In the city state of
Athens, the port of
Piraeus enforced a system of levies to raise taxes for the Athenian government. Grain was a key commodity that was imported through the port, and Piraeus was one of the main ports in the
east Mediterranean. A levy of two percent was placed on goods arriving in the market through the docks of Piraeus. The Athenian government also placed restrictions on the lending of money and transport of grain to only be allowed through the port of Piraeus.
Britain In the 14th century,
Edward III took interventionist measures, such as banning the import of woollen cloth in an attempt to develop local manufacturing. Beginning in 1489,
Henry VII took actions such as increasing export duties on raw wool. The Tudor monarchs, especially
Henry VIII and
Elizabeth I, used protectionism, subsidies, distribution of monopoly rights, government-sponsored industrial espionage and other means of government intervention to protect the wool industry. Outlining his policy, Walpole declared that "". British protectionist policies continued over the next century, with Britain remained a highly protectionist country until the mid-19th century. By 1820, the UK's average tariff rate on manufactured imports was 45–55%. In 1846 the Corn Laws were repealed, so tariffs were significantly reduced. Economic historians see the repeal of the Corn Laws as a decisive shift towards
free trade in Britain. According to a 2021 study, the repeal of the Corn Laws benefitted the bottom 90% of income earners in the United Kingdom economically, while causing income losses for the top 10% of income earners. In the UK customs duties on many manufactured goods were also abolished. The
Navigation Acts were abolished in 1849 when free traders won the public debate in the UK. But while free trade progressed in the UK, protectionism continued on the Continent. The UK unilaterally pursued free trade, even as most other large industrial powers retained protectionist policies. For example, the USA emerged from the Civil War even more explicitly protectionist than before, Germany under
Bismarck rejected free trade, and the rest of Europe followed suit. In response to the
Great Depression, Britain temporarily abandoned free trade in 1932. The country reintroduced large-scale tariffs. Political support by members of
Congress often reflects the economic interests of producers rather than
consumers, as producers tend to be better organized politically and employ many voting workers. Trade-related interests differ across industries, depending on whether they focus on exports or face import competition. In general, workers in export-oriented sectors favor lower tariffs, while those in import-competing industries support higher tariffs. The economic burden of the Navigation Acts fell mostly on the southern colonies, especially tobacco planters in Maryland and Virginia, potentially reducing regional income by up to 2.5% and strengthening support for independence. American foreign trade declined sharply during the
Revolutionary War and remained subdued into the 1780s. Trade revived during the 1790s but remained volatile due to ongoing military conflicts in Europe. President
Thomas Jefferson initiated a notable policy experiment by enacting a complete embargo on maritime commerce, with Congressional support, beginning in December 1807. The stated objective of the embargo was to protect American vessels and sailors from becoming entangled in the Anglo-French naval conflict (the
Napoleonic Wars). By mid-1808, the United States had reached near-
autarkic conditions, representing one of the most extreme peacetime interruptions of international trade in its history. The embargo, which remained in effect from December 1807 to March 1809, imposed significant economic costs. From 1837 to 1860, spanning the
Second Party System and ending with the Civil War, the Democratic Party held political dominance in the United States. The Democrats drew support primarily from the export-oriented South and promoted the slogan “a tariff for revenue only” to express their opposition to protective tariffs. As a result, the average tariff declined from early 1830s levels to under 20% by 1860. During this period, there were 12 sessions of Congress: 7 under unified government (6 led by Democrats, 1 by Whigs) and 5 under divided control. This meant that over the 34-year span, the pro-tariff
Whig Party, based in the North, held power for only two years. They succeeded in raising tariffs in 1842, but this was reversed in 1846 after Democrats returned to power. Throughout the 10 years of divided government, tariff policy remained unchanged.
Great Depression and Smoot–Hawley Tariff (1929–1933) The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff, is considered one of the most controversial tariff laws ever enacted by the United States Congress. The act raised the average tariff on dutiable imports from approximately 40% to 47%, though price deflation during the
Great Depression caused the effective rate to rise to nearly 60% by 1932. The Smoot–Hawley Tariff was implemented as the global economy was entering a severe downturn. The Great Depression of 1929–1933 represented an economic collapse for both the United States—where real GDP declined by about 25% and
unemployment exceeded 20%—and much of the world. As international trade contracted, trade barriers multiplied, unemployment increased, and industrial output declined worldwide, leading many to attribute part of the global economic crisis to the Smoot–Hawley Tariff. The extent to which this legislation contributed to the depth of the Great Depression has remained a subject of ongoing debate. In a November 2024 article,
The Economist observed that the Act, "which raised average tariffs on imports by around 20% and incited a tit-for-tat trade war, was devastatingly effective: global trade fell by two-thirds. It was so catastrophic global trade fell by two-thirds. It was so catastrophic for growth in America and around the world that legislators have not touched the issue since. 'Smoot-Hawley' became synonymous with disastrous policy making". Economist
Paul Krugman argues that protectionism does not necessarily cause
recessions, since a reduction in imports resulting from tariffs can have an expansionary effect that offsets the decline in exports. In his view, trade wars tend to reduce exports and imports symmetrically, with limited net impact on economic growth. He contends that the Smoot–Hawley Tariff Act was not the cause of the Great Depression; instead, he sees the sharp decline in trade between 1929 and 1933 as a consequence of the Depression, with trade barriers representing a policy response rather than a trigger. Economist
Milton Friedman argued that while the tariffs of 1930 caused harm, they were not the main cause for the Great Depression. He placed greater blame on the lack of sufficient action on the part of the Federal Reserve.
Peter Temin, an economist at the Massachusetts Institute of Technology, has agreed that the contractionary effect of the tariff was small. Other economists have contended that the record tariffs of the 1920s and early 1930s exacerbated the
Great Depression in the U.S., in part because of retaliatory tariffs imposed by other countries on the United States.
Reciprocity period (1934–2016) The Great Depression led to a political realignment following the Democratic victory in the 1932 election. This election ended decades of Republican dominance and initiated a period of Democratic control over the federal government that lasted from 1933 to 1993. The realignment shifted influence toward the party that prioritized export-oriented interests in the South. Consequently, the focus of trade policy moved from protectionism to reciprocity, and average tariff levels declined significantly. During this period, there were 30 sessions of Congress, with 16 under unified government (15 Democratic, 1 Republican) and 14 under divided government. Over these 60 years, the overarching goal of promoting reciprocal trade agreements remained largely unchanged, including during the two-year span (1953–1955) when Republicans held unified control. After the 1993 vote on the
North American Free Trade Agreement (NAFTA), Democratic support for trade liberalization declined significantly. By that time, the two major parties had effectively reversed their positions on trade policy. This shift in party alignment primarily reflects changes in regional representation: the South transitioned from being a Democratic stronghold to a Republican one, while the Northeast became increasingly Democratic. As a result, regional views on trade policy remained largely consistent, but the parties came to represent different geographic constituencies. == Basic economic analysis ==