By James Williams, Editor

Trump’s recents threats regarding the use of tariffs has sent our Allies into a frenzy, especially Canada. Canada’s Prime Minister Justin Trudeau had the following to say; 

“I want to speak directly to Americans, our closest friends and neighbours. This is a choice that will harm Canadians, but beyond that, it will have real consequences for you, the American people. Tariffs against Canada will put your jobs at risk, potentially shutting down American auto assembly plants and other manufacturing plants. They will raise costs for you, including food at the grocery stores and gas at the pump.”

“From the beaches of Normandy to the mountains of the Korean peninsula, from the fields of Flanders to the streets of Kandahar, we have fought and died alongside you during your darkest hours. During the summer of 2005 when Hurricane Katrina ravaged your great city of New Orleans or mere weeks ago when we sent water bombers to tackle the wildfires in California, during the day the world stood still, September 11, 2001, when we provided you refuge to stranded passengers and planes, we were always there, standing with you, grieving with you.”

So let’s take a look at our history regarding tariffs and who do they really affect. 

Since the late 1700s, the U.S. government has used tariffs to generate revenue and protect domestic industries. Tariffs—taxes imposed on imported goods—have played a significant role in shaping economic policies throughout American history. While they can help domestic businesses and government revenues, they also have drawbacks, particularly for consumers.

A Brief History of Tariffs in the U.S.

Tariffs have been a cornerstone of U.S. economic policy since the nation’s founding. One of the earliest examples was the Tariff Act of 1789, which aimed to raise government funds and encourage domestic manufacturing. Throughout the 19th and early 20th centuries, tariffs were a primary source of federal revenue before the introduction of the income tax in 1913.

One of the most infamous examples of tariff policy was the Smoot-Hawley Tariff Act of 1930, which raised U.S. tariffs on over 20,000 imported goods. While it was intended to protect American industries during the Great Depression, it led to retaliatory tariffs from other countries, exacerbating the global economic downturn.

More recently, in 2018, the U.S. imposed tariffs on steel and aluminum imports under the Trump administration’s trade policies, aiming to protect domestic industries. This led to retaliatory tariffs from China and the European Union, impacting American farmers and manufacturers who relied on global markets.

Who Benefits From a Tariff?

The primary beneficiaries of tariffs are:

The Government – Since tariffs are a form of tax, they generate revenue for the government.

Domestic Businesses – By making foreign products more expensive, tariffs encourage consumers to buy locally produced goods, boosting domestic industries.

Workers in Protected Industries – When tariffs protect certain industries, they can help sustain jobs by reducing competition from cheaper foreign goods.

For example, the steel tariffs imposed in 2018 aimed to help U.S. steelworkers by reducing reliance on imported steel. However, these same tariffs also raised costs for industries that use steel, such as car manufacturers.

While tariffs can protect domestic businesses, they often lead to higher prices for consumers. This happens because:

Increased Import Costs – Importers must pay additional taxes on goods, and they usually pass these costs onto consumers in the form of higher prices.

Limited Product Availability – When tariffs make foreign goods too expensive, consumers may have fewer choices.

Retaliatory Tariffs – Other countries may respond by imposing their own tariffs on U.S. goods, making it harder for American businesses to sell products overseas.

For instance, when the U.S. imposed tariffs on Chinese goods, China retaliated with tariffs on American agricultural products, impacting U.S. farmers who export soybeans and other crops.

What Is the Purpose of a Tariff?

Governments impose tariffs for several reasons:

Revenue Generation – Historically, tariffs were a primary way for governments to fund public projects.

Protecting Domestic Industries – By making imported goods more expensive, tariffs encourage consumers to buy locally made products.

Addressing Trade Imbalances – Some tariffs are used to reduce a country’s dependence on imports and support domestic production.

National Security – Tariffs on certain industries, like defense-related technology, help protect national interests.

Tariffs have been a key tool in U.S. economic policy for centuries, shaping trade relationships and domestic industries. While they benefit governments and local businesses, they often come at the expense of consumers who face higher prices. Additionally, tariffs can trigger trade wars, as seen in past disputes with China and the European Union.

As global trade continues to evolve, the debate over tariffs remains relevant. Are they an effective way to protect jobs and industries, or do they create more economic harm than good?

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