News Post

By John Howard

When Americans think of tariffs today, they often picture trade wars, pricey foreign goods, political brinkmanship, or enigmatic World Trade Organization (“WTO”) disputes. But for most of U.S. history, tariffs were not just economic tools—they were foundational to the country’s legal identity, fiscal policy, and constitutional evolution.  They were and are woven into the fabric of the nation’s history, serving as tools for revenue generation, industrial protection, and even political controversy. While modern discussions about tariffs often spark heated debates, their historical evolution offers a fascinating glimpse into how economic policy has shaped society. This article explores the history of tariffs in the United States, highlighting key moments that demonstrate their importance and impact.

When the United States gained independence in 1776, it faced a monumental challenge: funding a government without relying on direct taxation. The Constitution gave Congress the power “[t]o lay and collect Taxes, Duties, Imposts and Excises,”[1] and it is no accident that tariffs were the earliest and most important use of this power. With no income tax system in place until 1913, tariffs quickly emerged as the primary source of federal revenue in the late 18^th and 19^th centuries.[2] The new nation’s first major piece of legislation, the Tariff Act of 1789,[3] passed just weeks after the First Congress convened and was signed into law by President George Washington. Proposed by Alexander Hamilton, it served two purposes: to generate revenue for a cash-strapped federal government and to protect fledgling American industries from British competition.

Hamilton’s vision for tariffs was both pragmatic and forward-thinking. In his Report on Manufactures (1791),[4] he argued that tariffs could serve dual purposes: to provide essential funds for government operations and to foster economic independence by shielding American manufacturers from foreign competition. At the time, the United States was heavily reliant on imported goods from Europe, particularly Britain. Hamilton believed that nurturing domestic production would strengthen the nation’s economy and reduce its vulnerability to external pressures.[5]

For decades following the 1789 Act’s passage, tariffs accounted for over 90% of federal revenue—a testament to their importance in early American governance.[6] This reliance on tariffs persisted until the introduction of income taxes through the Sixteenth Amendment in 1913.[7] Tariffs helped build the legal and political framework of the United States, and lawyers have always been at the center of developing and maintaining them all . Indeed, American lawyers were litigating over sugar duties and wool rates at ports from Charleston to New York before “international trade law” became its own discipline.

As the United States transitioned from an agrarian economy to an industrial one during the 19th century, the central role of tariffs was to protect emerging industries. The concept of shielding “infant industries” from foreign competition gained traction among policymakers who feared that emerging American manufacturers would struggle against more established European rivals.[8] A notable example was Henry Clay’s “American System,”[9] which was a series of economic policies designed to promote domestic manufacturing through protective tariffs, infrastructure development, and a national bank. Clay envisioned high tariff rates as a means to nurture industries such as textiles and steel, while generating revenue for internal improvements, including roads and canals.[10] These protective measures allowed industries to flourish during America’s industrial revolution. By imposing high duties on imported goods, policymakers effectively incentivized domestic production while discouraging reliance on imports. For example, tariffs helped establish Pennsylvania as a hub for iron production and New England as a center for textile manufacturing.[11]

The Constitution gave Congress control over tariffs, but it also left the door open to legal and political conflict. The Commerce Clause[12] and the Treaty Clause[13] gave the federal government broad power to regulate trade and enter into international agreements, but who defined the limits? And what happened when federal tariff law clashed with local economic interests?

Protective tariffs were not universally embraced, and over time tariff disputes began to erupt. Southern states, which relied heavily on agricultural exports and imported goods, often opposed high tariffs. They viewed these measures as benefiting northern manufacturers at their expense—a source of growing regional tension.

This North-South tension culminated in one of the most infamous tariff laws in U.S. history: the Tariff of Abominations (1828).[14] The law raised duties on imported goods to unprecedented levels, sparking outrage in Southern states and contributing to the Nullification Crisis—a political standoff between South Carolina and the federal government.  John C. Calhoun, both a political theorist and practicing lawyer, became the voice of this constitutional crisis. Though ultimately defused by a compromise tariff enacted in 1833, the showdown foreshadowed deeper fractures to come.

By the mid-19th century, tariff policy had hardened into regional ideology. The industrial North favored protective tariffs to shield its factories from European competition. The agrarian South, which relied on exporting cotton and importing manufactured goods, opposed them.

This divergence played no small role in the drift toward the Civil War. While slavery was the dominant moral and political issue, tariffs were the economic kindling. Southern grievances about “Yankee tariffs” echoed alongside complaints about abolitionists. After secession, one of the Confederacy’s first acts was to lower import duties to stimulate trade with Europe.[15] The Union, by contrast, passed the high Morrill Tariff in 1861 to protect its economy and fund the war effort.[16]

Lawyers on both sides navigated the shifting terrain. They advised importers, challenged tariffs in court, and helped define the limits of wartime economic powers. Tariff law was no longer just about statutes—it was about sovereignty, survival, and the constitutional order. As America’s economy matured in the late 19th century, debates over tariffs intensified. Protectionist policies dominated much of this period, with high tariff rates shielding domestic industries from foreign competition.[17] However, these measures also led to higher consumer prices and strained international relations.[18]

The Smoot-Hawley Tariff Act of 1930[19] marked a turning point in tariff policy—and not for positive reasons. Passed during the Great Depression, this Act raised duties on hundreds of imports to protect American jobs and businesses. However, it exacerbated global economic woes by triggering retaliatory tariffs from other countries, leading to a sharp decline in international trade.[20] The backlash was swift and enduring. Lawyers, economists, and policymakers began to question the wisdom of unilateral tariff setting. Franklin Roosevelt’s administration pivoted toward reciprocal trade agreements, and in 1934, Congress passed the Reciprocal Trade Agreements Act,[21] allowing the executive branch to negotiate tariff reductions directly. This shift planted the seeds for a new legal regime, one in which trade would be increasingly governed by treaties and multilateral institutions rather than congressional micromanagement. U.S. policymakers began shifting toward free trade after World War II. The creation of institutions like the General Agreement on Tariffs and Trade (GATT)[22] in 1947 (later replaced by the World Trade Organization in 1995) signaled a new era of global economic cooperation aimed at reducing trade barriers.

This shift was also accompanied by significant legal developments designed to facilitate international commerce. The Trade Expansion Act of 1962[23] granted President John F. Kennedy authority to negotiate tariff reductions with other nations—a move that paved the way for greater economic integration. Over time, free trade agreements like NAFTA (1994)[24] further reduced barriers between nations while fostering cross-border investment and collaboration. Tariff policy became part of a broader framework of global economic law.

Throughout this long arc of history, lawyers have played a crucial but evolving role in the world of tariffs. In the early days, they were often solo practitioners or portside specialists, helping merchants navigate customs duties and avoid seizures. But over time the legal profession’s role with respect to tariffs evolved with the changing landscape. Large firms began building trade practices that combined litigation, policy advocacy, and regulatory compliance. International trade lawyers emerged to navigate the complexities of WTO rules, antidumping measures,[1] and customs classifications. U.S. firms began advising multinational clients on how to comply with ever-changing tariff schedules, rules of origin, customs compliance, tariff penalties, and trade remedy proceedings.

In our day, lawyers are helping companies strategically plan around tariffs, comply with them, fight them when needed, and even shape future laws about them. The Court of International Trade, the U.S. International Trade Commission, and appellate courts frequently hear cases involving tariff classifications, presidential trade authority, and the interaction between federal statutes and international obligations. Tariff lawyers are often part diplomat, part litigator, part economist. They advise Fortune 500 companies on tariff mitigation strategies. They litigate customs classification disputes worth millions, draft white papers on pending trade actions, and, in a globalized world, straddle the divide between domestic law and international institutions.

President Donald Trump’s second administration has implemented widespread tariffs as part of his “America First” agenda. We have seen renewed litigation over the scope of presidential power under statutes like Section 232 of the Trade Expansion Act of 1962.[25] Multiple issues are now in the courts. Can the executive branch impose tariffs for national security reasons without congressional approval? Who decides what counts as a “threat”? The answers remain contested, and lawyers are at the center of those debates. These measures have reignited discussions about whether tariffs should be used as tools for economic protection or geopolitical leverage. Whether shielding strategic industries, enforcing foreign policy, or spurring litigation, tariffs continue to shape the legal and political landscape—and the need for sophisticated legal guidance is as great as ever.

In a world where goods cross borders as easily as tweets, the old logic of tariffs is both obsolete and more relevant than ever. The real question may not be whether tariffs work, but what kind of nation we want to build—with them, despite them, or because of them. Ultimately, the pro-tariff side sees them as strategic tools for national strength and fairness, while the anti-tariff side views them as economically harmful in a deeply interconnected world.  The debates over tariffs typically center on several key arguments as outlined below.

Pro-Tariff Argument: “Tariffs Will Work”

• Protection of Domestic Industries: Tariffs shield local manufacturers from cheaper foreign competition, giving them room to grow and retain jobs.
• National Security & Strategic Interests: Protecting key industries (like steel and semiconductors) is critical to national security and economic independence.
• Leverage in Trade Negotiations: Tariffs can be a bargaining chip to pressure other countries into fairer trade agreements or to address unfair practices (like dumping or intellectual property theft).
• Revitalization of Manufacturing: Re-shoring jobs and rebuilding domestic supply chains are worth short-term costs.
• Reduction of Trade Deficits: By making imports more expensive, tariffs can reduce reliance on foreign goods and encourage domestic consumption.

Anti-Tariff Argument: “Tariffs Won’t Work”

• Higher Consumer Prices: Tariffs are effectively a tax on imports, making goods more expensive for businesses and consumers.
• Retaliation & Threat of Trade Wars: Other countries respond with their own tariffs, hurting exporters and escalating conflict (e.g., China–U.S. trade war).
• Global Supply Chains: In a globalized economy, production is interconnected. Tariffs disrupt supply chains and make U.S. companies less competitive.
• Inefficiency & Cronyism: Protectionist policies can prop up failing industries instead of allowing the market to adapt and innovate, and encourage lobbying as opposed to innovation.

At the heart of it, the debate’s focal point is this: Should we accept the realities of globalization and compete, or should we push back and protect national economic interests—even at a cost? From the founding of our nation to the present, tariffs have been central to debates about federal power, constitutional interpretation, and national identity. They have divided regions, triggered crises, and forged institutions. The history of tariffs demonstrates their dual nature as both economic policy tools and political flashpoints. From their origins as revenue generators to their role in fostering industrial growth and shaping international relations, tariffs have left an indelible mark on U.S. history.

For legal professionals and policymakers alike, understanding this history is essential for navigating modern trade challenges. While debates over protectionism versus free trade will undoubtedly continue, one thing remains clear: tariffs are far more than taxes on imports—they are reflections of national priorities and global dynamics. By examining how tariffs have evolved over time, we gain valuable insight into their impact on economies and societies—and perhaps a better understanding of how they might shape our future.

[1] “Dumping” in international trade means a company sells products in another country at a lower price than it does in its own country, or even below its cost of production and it is considered unfair competition which leads to the importing country imposing tariffs on the dumped goods to protect domestic industries.

[1] U.S. Const. art. I, § 8, cl. 1.

[2] Revenue Act of 1913, also known as the Tariff Act of 1913, Underwood Tariff or the Underwood–Simmons Act (ch. 16, 38 Stat. 114).

[3] Id.

[4] Alexander Hamilton’s, Report on Manufactures (1791), reprinted in 3 Annals of Cong. 971 (1791).

[5] Id.

[6] Douglas A. Irwin, Clashing over Commerce: A History of US Trade Policy (Chicago: University of Chicago Press 2017).

[7] U.S. Const. amend. XVI.

[8] Douglas A. Irwin, Clashing over Commerce: A History of US Trade Policy (Chicago: University of Chicago Press 2017).

[9] Maurice G. Baxter, Henry Clay and the American System (Lexington: University Press of Kentucky 1995).

[10] Id.

[11] Id.

[12] U.S. Const. art. I, § 8, cl 3.

[13] U.S. Const. art. II, § 2, cl. 2.

[14] Tariff of 1828, ch. 55, 4 stat. 270 (1828).

[15] Douglas A. Irwin, Clashing over Commerce: A History of US Trade Policy (Chicago: University of Chicago Press 2017).

[16] Id.

[17] Id.

[18] Id.

[19] Tariff Act of 1930, ch. 497, 46 Stat. 590

[20] U.S. Department of State, Off. of the Historian, Protectionism in the Interwar Period, in Milestones in the History of U.S. Foreign Relations: 1921-1936.

[21] Reciprocal Trade Agreements Act, ch. 474, 48 Stat. 943 (1934).

[22] General Agreement on Tariffs and Trade, Oct. 30, 1947, 55 U.N.T.S. 194.

[23] Trade Expansion Act of 1962. Pub. L. No. 87-794, 76 Stat. 872 (1962).

[24] North American Free Trade Agreement, Dec. 17, 1992, Can.-Mex.-U.S., 32 I.L.M. 289 (1993).

[25] Am. Inst. for Int’l Steel, Inc. v. United States, 806 F. App’x 9982 (Fed. Cir. 2020); USP Holdings, Inc. v. United States, 36 F.4^th 1359 (Fed. Cir. 2022); Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548 (1976).