Trucks wait in a queue to cross into the US. Picture taken April 14, 2023.

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The historic significance of Trump's tariff actions

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Photo Credit: REUTERS/Jose Luis Gonzalez

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On February 1, 2025, President Donald Trump announced the imposition of 25 percent tariffs on imports from Canada and Mexico (except energy products from Canada, which will be taxed at 10 percent), along with a 10 percent tariff on imports from China. On February 3, 2025, the Trump administration decided to postpone for 30 days the implementation of the tariffs on Canada and Mexico, but the threat to impose them remains. Although these plans could change at any time, the imposition of these tariffs would constitute a historic event in the annals of US trade policy and would amount to one of the largest increases in trade taxes in US history.

One has to go back almost a century to find tariff increases comparable to what the president is planning. Before the United States pivoted in the 1930s toward trade agreements to reduce tariffs, Congress regularly voted to change the import duties in the tariff code. Perhaps the most infamous was the Smoot-Hawley tariff of 1930, enacted as the world economy was sinking into the Great Depression. There was also the McKinley tariff of 1890, one that Trump has often touted as being responsible for America's economic success in the late 19th century, although it too was followed by a severe depression of 1893–96. And there is the Fordney-McCumber tariff of 1922, designed to reverse a Democratic tariff reduction in 1913. All of these tariff rate increases were enacted by Republican congresses and signed by Republican presidents. Now, of course, presidents have discretion in setting tariff rates, and that is what Trump has done.

How do the new Trump tariffs, as announced on February 1, compare to these past tariff increases? Unfortunately, there is no straightforward way of comparing tariffs over time. These actions differ in the base from which they start, the degree to which they increase rates, the share of trade they cover, and the importance of trade in the economy, among many other dimensions. For example, which is more significant: a tariff that raises duties from 5 percent to 10 percent on 100 percent of imports, or a tariff that raises duties from 20 percent to 40 percent on 40 percent of all imports?

Still, it is possible to make some very basic comparisons, at a broad level, to see which tariff changes might be more significant.

Let's start with the proposed new tariffs on US imports from Canada and Mexico. In 2023, these imports accounted for 29 percent of total US imports of goods, amounting to 3.2 percent of US GDP (source: Exhibit 13, FT-900 2023 Annual). These imports entered the United States duty free, just as US exports to Canada and Mexico were given duty-free treatment under the terms of the US-Mexico-Canada trade agreement (USMCA), the Trump-negotiated successor agreement to the North American Free Trade Agreement (NAFTA). The Trump administration would raise tariffs from 0 percent to 25 percent on imports that amount to more than 3 percent of GDP, with the exception of imports of oil from Canada, for which the tariff will be 10 percent. (Oil accounts for about $93 billion of the $419 billion worth of imports from Canada, or 0.3 percent of GDP.)

In addition, a new tariff of 10 percent will be levied on imports from China. In 2023, those imports comprised 14 percent of total US imports, or 1.5 percent of GDP.

If implemented, what will these new tariffs do to the average tariff level of the United States? In 2023, the last year with full annual data available, the average US tariff on all imports was 2.4 percent, and the average US tariff on dutiable imports was 7.4 percent, according to the US International Trade Commission. Now all imports from Canada and Mexico move off the duty-free list and become dutiable, and imports from China face an additional tariff. Assuming no change in the amount of imports, which would give us an upper bound of the impact of the new tariffs on the average tariff, the Trump tariff hike would increase the average tariff on total imports from 2.4 percent to 10.5 percent, an increase of 8.1 percentage points. It would also increase the average tariff on dutiable imports from 7.4 percent to 17.3 percent, an increase of 9.9 percentage points.

This static calculation is an upper bound because it does not incorporate any reduction in imports because of the tariffs. The reduction of imports subject to the tariffs would dampen the measured increase in average tariffs as importers substitute away from those goods. However, what makes the static approach useful is that, in the past, the Tariff Commission and congressional committees used exactly that method when they were evaluating the change in the average tariff due to new legislation. Hence, the crude approach here is roughly comparable to that used to examine past tariff legislation.

The table below reports on the share of imports affected by the four major tariff changes over the past century (as a percentage of GDP), the baseline tariff in place before the tariff change, the increase in the average tariff (static estimate), and the percentage point change in the average tariff. Because trade is a larger part of the economy today than in the past, Trump's current tariffs directly impact a larger fraction of the US economy. Notably, the Smoot-Hawley tariff hit dutiable imports when they amounted to just 1.4 percent of GDP (1929). Trump's new tariffs increase the average tariff on dutiable imports by 9.9 percentage points, significantly more than Smoot-Hawley but starting from a much lower base. Even after the Trump tariffs, however, the average tariff on dutiable and total imports still will be considerably lower than during the previous tariff regime.

The McKinley and Fordney-McCumber tariffs were substantial additions to the already high existing tariffs. But their economic impact was much smaller because imports were a relatively small share of GDP. One of the biggest differences between a century ago and today is the growth of global supply chains and international production networks. These factors make trade, and particularly trade in intermediate goods and components, a much more significant part of the US economy today than in the distant past and tariffs a much greater disruption to the economy.

Historical tariff comparisons
  Affected imports (share of GDP) Average tariff (dutiable imports) prior to change Average tariff (dutiable imports) after change Percentage point increase in rate
McKinley Tariff of 1890 2.70% 41.3 52  +10.6 points
Fordney McCumber Tariff of 1922 1.30% 21 38.8  +17.8 points
Smoot-Hawley Tariff of 1930 1.40% 35.7 41.1  +5.4 points
Trump Tariff, as announced February 1, of 2025 4.80% 7.4 17.3   +9.9 points
Sources: Author's calculations based on the following sources. For McKinley duties: "Duties Collected under the Existing Tariff," Senate Miscellaneous Document No. 178, 51st Congress, 1st Session, June 28, 1890, p. 241. For Fordney-McCumber: US Tariff Commission (1930), "Comparison of Rates of Duty in Pending Tariff Bill of 1929," Senate Document No. 119. 71st Congress, 2d Session, Washington, D.C.: GPO, p. 1; and Congressional Record, June 14, 1930, 10748. For Smoot-Hawley: Douglas A. Irwin, Peddling Protectionism: Smoot-Hawley and the Great Depression, Princeton University Press, 2011, p. 103. For Nominal GDP: BEA for 1929 and 2023; historical nominal GDP. https://www.measuringworth.com/datasets/usgdp/

The figure below shows another way to put the proposed Trump tariffs in historical perspective. This figure presents the average US tariff from 1790 to 2023 and includes the projected tariffs (indicated with a dotted line) unchanged in 2024 and rising in 2025 with the new duties on Canada, Mexico, and China. The average tariff rises much more sharply than during the first Trump administration, when tariffs were imposed on about half of imports from China and on imported steel and aluminum. The most recent tariff increase is easily the largest since World War II and marks a clear break from the more or less continuous reduction in tariffs since 1932. The new Trump tariffs are likely to put the average tariff back to where it had been in the 1940s. The United States has not seen an average tariff on total imports of around 10 percent since 1943 and has not seen an average tariff on dutiable imports of about 17 percent since 1947.

Even with the new Trump tariffs, the average tariff would remain much lower than in the late 19th and early 20th centuries. We are not close to the days of the Tariff of Abomination (1828) or Smoot-Hawley (1930). But then again, the president has promised that more tariffs are to come. New tariffs on imports from the European Union, which amounted to 2.1 percent of US GDP in 2023, would change these calculations considerably.

CORRECTION: Trump’s new tariffs, if fully implemented, would take effect in 2025 and would raise tariffs to the highest levels since World War II. An earlier version of the chart incorrectly showed them taking effect in 2024 and described them as the largest increase in tariffs since World War II.

Data Disclosure

The data underlying this analysis can be downloaded here [xlsx].

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