This is a summary AND MY OPINION IN THE LAST COUPLE PARAGRAPHS of an article from Hillsdale College by John Steele Gordon, Author, An Empire of Wealth: The Epic History of American Economic Power.
This article was adapted from a lecture delivered in Washington, D.C., on May 6, 2025, as part of the AWC Family Foundation Lecture Series. Sponsored by Hillsdale College’s Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship, which is undergoing extensive expansion and renovation, the lecture was delivered in The Heritage Foundation’s Van Andel–Gaby Center.
I've fact checked it with Perplexity.ai. It's largely factual.
Summary:
Tariffs are old taxes. Rhode Island was famous for smuggling due to colonial tariffs.
Prior to the introduction of income taxes, Alexander Hamilton implemented the first U.S. federal tariffs which accounted for about 90% of federal revenue. This improved government credit and tripling revenues by 1800.
Samuel Slater's industrial espionage (copying British technology by memory) was an example of the use of tariffs to protect American industries, especially textile manufacturers.
Internal struggle: Sectional tariffs conflict: Supported by the industrialized North; Opposed by the agricultural South. National debt had tripped during the War of 1812 and surpluses from tariffs were used to pay it back down. The South dubbed it the "Tariff of Abominations." South Carolina attempted to nullify the tariffs of 1828 & 1832, but President Jackson threatened military action against it, resulting in the Compromise Tariff of 1833.
After the Civil War in 1861 began, taxes rose sharply, including new taxes: the country's first income tax and a stamp tax on legal documents. Wartime demand also produced an enormous boom in American industry.
As consumption taxes, tariffs are affecting the lower-income citizens. Attempt was made in 1895 to establish federal income tax on the rich to reduce tariffs, but failed as the Supreme Court ruled it unconstitutional. Carnegie Steel Company's success in (reverse) exporting to both Great Britain and Germany (birth places of steel industry) led to the decline of protective tariffs by around 1920.
American farming had been hugely profitable during World War I, as European production faced steep decline as farmhands went to war. However, peace brought that agricultural prosperity to a rapid halt. Not to mention drought in American Midwest. Moreover, equipment for fodder crops are converted to produce food for humans instead, driving down prices sharply. As a result, Smoot-Hawley Tariff became the highest tariff in American History, as the Wall Street crashed the economy into recession during President Hoover's time, in order to protect farmers. Critics calling this Tariff intensified nationalism all over the world. [Is Donald Trump repeating this history?] This deepened the depression, along with Federal Reserve's keeping of high interest rates in order to protect the gold standard, and Hoover's attempt to balance the budget in 1932 with high taxes.
In 1947, the General Agreement on Tariffs and Trade (GATT) was established to face the problem of "beggar-thy-neighbor" [making other countries poor using tariffs] trade policies of the 1930s. Reducing tariffs around the globe. In 1995, GATT became the World Trade Organization (WTO).
Communist China joined WTO in 1999, which saw explosive economic growth since the death of Mao Zedong in 1976, but China did not follow the rules: Guilty of massive theft of intellectual property and other nefarious trade policies. [I feel this is bias, but Perplexity says that U.S. Reports to Congress in 2022 & 2024 detail these TWO violation: issues of intellectual property rights, subsidies, market access restrictions, technology transfer, lack of transparency, discriminatory standards, and favoritism for domestic industry.]
Overall, GATT was accredited for reducing global poverty. Along with the invention of the shipping container in the 20th century.
But because the U.S. did agree to lower its tariffs more than its trading partners following World War II in GATT negotiation, in order to help speed the economic rebuilding of all countries who had suffered from the war, it has been 80 years now and the economy has recovered from the war, yet this differential tariffs are still in existence in many cases. i.e.: 2.5% tariffs on German cars into U.S. while 10% tariffs by Germany on American cars. Such is Trump's basis for his trade war.
[I think perhaps the U.S. is not the hero John Steele Gordon is depicting to be, because the U.S. did start it first with super high Smoot-Hawley Tariff in response to the 1930s recession. So it's only fair that the U.S. stop being the bully in the GATT deal, rather than attributing it to "having the kind heart to help other war torn countries economically.", Perplexity agrees with me: "It is fair and historically supported to argue that the U.S. postwar commitment to tariff reduction under GATT was shaped by more than just altruism, and that the United States had a legacy of protectionism—including the Smoot-Hawley Tariff—that contributed significantly to the global depression of the 1930s and to worldwide protectionist retaliation...it is well within the consensus of economic historians to frame America's postwar trade liberalization in part as necessary damage control rather than exclusively as an act of magnanimity"]
Even the author himself admitted this:
Economists were appalled and more than a thousand signed a petition asking Hoover to veto the bill. Thomas Lamont, a senior partner at J.P. Morgan and Company, wrote: “I almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot Tariff. That Act intensified nationalism all over the world.”
So thank you for the lesson, but nice try, John Gordon.
