as
most favoured nation in early 2000s.
United States trade policy has varied widely through various American historical and industrial periods. As a major developed nation, the U.S. has relied heavily on the
import of
raw materials and the
export of
finished goods. Because of the significance for American economy and industry, much weight has been placed on trade policy by elected officials and business leaders. According to economic historian
Douglas Irwin, tariffs have historically served three main purposes: generating revenue for the
federal government, restricting imports to protect domestic producers, and securing reciprocity through
trade agreements that reduce barriers. The history of
U.S. trade policy can be divided into three distinct eras, each characterized by the predominance of one goal. From 1790 to 1860, revenue considerations dominated, as import duties accounted for approximately 90% of federal government receipts. From 1861 to 1933, the growing reliance on
domestic taxation shifted the focus of tariffs toward protecting domestic industries. From 1934 to 2016, the primary objective of trade policy became the negotiation of trade agreements with other countries. The three eras of U.S. tariff history were separated by two major shocks—the Civil War and the Great Depression—that realigned political power and shifted trade policy objectives. 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 Union was able to avoid this, through skillful use of diplomacy and threats to other aspects of European-U.S. trade relations. The 1920s marked a decade of economic growth in the United States following a Classical
supply side policy. U.S. President
Warren Harding signed the
Emergency Tariff of 1921 and the
Fordney–McCumber Tariff of 1922. Harding's policies reduced taxes and protected U.S. business and agriculture. Following the
Great Depression and
World War II, the
United Nations Monetary and Financial Conference brought the
Bretton Woods currency agreement followed by the economy of the 1950s and 1960s. In 1971, President
Richard Nixon ended U.S. ties to Bretton Woods, leaving the U.S. with a
floating fiat currency. The
stagflation of the 1970s saw a U.S. economy characterized by slower GDP growth. In 1988, the United States ranked first in the world in the
Economist Intelligence Unit "quality of life index" and third in the Economic Freedom of the World Index. Near the end of the
Second World War U.S. policy makers began to experiment on a broader level. In the 1940s, working with the British government, the United States developed two innovations to expand and govern trade among nations: the
General Agreement on Tariffs and Trade (GATT) and the
International Trade Organization (ITO). GATT was a temporary multilateral agreement designed to provide a framework of rules and a forum to negotiate trade barrier reductions among nations. The growing importance of international trade led to the establishment of the
Office of the U.S. Trade Representative in 1963 by Executive Order 11075, originally called The Office of the Special Representative for Trade Negotiations. In 2013 the United States' largest trading partner was Canada. In 2018, the year that a
trade war with China was launched by U.S. President
Donald Trump, the U.S. trade deficit in goods reached $891 billion, which was the largest on record before the $1,183 billion deficit in the trade of goods recorded in 2021. By the end of the Trump presidency, the trade war was widely characterized as a failure. On July 27, 2025, the United States and the
European Union concluded a trade agreement, providing for 15%
tariffs on European exports. The deal was announced by President Donald Trump and President of the European Commission,
Ursula von der Leyen, at
Turnberry, Scotland. European states committed to $750 billion in
energy purchases and $600 billion in additional investments in the United States. == Recent U.S. Tariff Policy Developments ==