The Death and Rebirth of Tariffs & Level Playing Field Perspective
John Fraim
What’s New
One of the areas that the White House communications might have put more time in explaining is the idea of tariffs. It has to be made visual, a story given to the message. Perhaps how they were the first source of government income. Few probably know this.
In other words, there are other ways to make Tariffs more appealing to calm down investors in the stock market. This is an area where commercials, podcast and YouTube influencers getting the message out there. Yet, there has really been little information about what tariffs are. The benefits of them have never really been explained.
The largest failure was the original roll-out of the tariffs. There are some very basic themes that could have been more emphasized, to show it was the main part of financing the government for many years. There were no income taxes in these years. Until the Income Tax came in 1916. It is easy to show the long chart of their importance in financing the government. Income taxes only one hundred years old. The new thing is not tariffs but income tax.
The United States pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century. Between 1861 and 1933, the U.S. had one of the highest average tariff rates on manufactured imports in the world. After 1942, the U.S. began to promote worldwide free trade. The U.S. tariff averaged only 5%. After the 2016 presidential election, the US increased trade protectionism. 2025 has gone all in on protectionism yet it is not really a “protectionism” because Trump wants to encourage business with many nations. Only on a level playing field.
A Level Playing Field = The New Golden Age?
In effect, it is this level playing field for America in world trade, might usher in the Golden Age Trump has been talking about. In effect, America getting reciprocal taxes around the world. As Trump repeatedly says, “we’re getting screwed by everybody.”
The new tariffs have created trillions in investments of manufacturing plants into America. This is one part of the Golden Age Trump talks about: providing thousands and millions of new jobs. Bringing prosperity back to communities. The other part of this golden age is the replacement of a new system for financing the government. One that is far less prone to corruption. More controllable.
In effect, the government is not controlling money by an income tax but rather an external tariff. Collecting tariffs are likely to prove much more tech savvy and subject perhaps to the DOGE team monitoring here. Perhaps creating tariff standards of how money is deposited. With tariffs, operations can be undertaken outside system. No internal transactions should be of interest.
The Birth & Death of Tariffs
The chart might a little fuzzy. Yet anyone can see that America dominated tariffs during the times of our great manufacturing growth. (Someone should publish a book on graphs of tariffs in the U.S.) According to Dartmouth economist Douglas Irwin, tariffs have served three primary purposes: “to raise revenue for the government, to restrict imports and protect domestic producers from foreign competition, and to reach reciprocity agreements that reduce trade barriers.”
From 1790 to 1860, average tariffs increased from 20 percent to 60 percent before declining again to 20 percent. From 1861 to 1933, which Irwin characterizes as the “restriction period,” the average tariffs increased to 50 percent and remained at that level for several decades. From 1934 onwards, which Irwin characterizes as the “reciprocity period,” the average tariff declined substantially until it leveled off at 5 percent.
Visualizing a Renewed America of Tariffs
The Trump disruptor machine has moved through the federal bureaucracy with an unheard-of speed. It is being held back in some areas by injunctions. But these will be challenges. A once solid Supreme Court now looks wishy washy with Roberts and Barrett voting with the liberals on the court often.
In all these past few months of the Trump administration, there has been more change than perhaps any time in American history. Few like change as habit and familiarity are valued greatly. Yet we’ve had the greatest political disruption in history and most Americans are worried about the future.
Trump has been a man of many visions over the years. Yet perhaps his major vision, only recently stated in his speeches, is the “Golden Years” of our nation.
From Draining the Swamp to a Creating a Golden Age
The vision is clear to Trump, and something stressed by current 47 but not by 45. The main job of 45, according to the metaphors created by Trump, was mostly a job of draining rather than a building something new for America. Trump 45 was the new kid in town. Of course, it wasn’t his first rodeo in business and entertainment. But it was an eye opener for him in politics.
What is this new vision of a Golden Age Trump speaks of more and more these days?
The more I think about it, the more I think it really is related to the shift in our economy from having other nations pay our income taxes to having thousands of internal tax agents.
In effect, some of insights into the Golden Age that Trump sees. Starting perhaps with some story, film or series that attempt to visualize what Trump sees as the Golden Age of the nation. Is it a waste of time telling why tariffs might be related to a new Golden Age in America? Perhaps so but a question that should at least be asked. Much of the vision of this new golden age is based on the prosperity in America during the years when tariffs were the way the government was funded. Until imposition of income tax in 1916. It is something Trump has a deep belief in.
The cap slogan of “Make America Great Again” needs to really be understood as referring in part to the years America dominated in tariffs. (Perhaps a new hat selling campaign with “Make American Tariffs Great Again.”) These are really the years that Trump has been referring to, the years when the nation ran on outside tariffs rather than an inside income tax. Gradually, America continued to lower tariffs until the income tax took over around 1916. Just a hundred years and look what it’s done.
NOTES
Tariffis brilliantly explained in 18 minutes.
Understading Tariffs in 5 Charts … https://www.capitalgroup.com/individual/insights/articles/understanding-tariffs-5-charts.html