Tariffs have been part of American economic policy since the founding of the United States. Over more than two centuries, they have helped finance the federal government, protect domestic industries, influence international trade negotiations, and shape relationships with major trading partners.

Their role, however, has changed considerably.

During the country's early decades, tariffs were primarily a source of government revenue. By the late 19th century, they had become an important instrument for protecting American manufacturers from foreign competition. Following the Great Depression, the United States increasingly pursued lower trade barriers through international agreements.

More recently, tariffs have returned to the center of U.S. economic policy, particularly under President Donald Trump.

Understanding this history helps explain why tariffs remain one of the most consequential and controversial tools available to American policymakers.

The modern history of American tariffs began shortly after the United States adopted its Constitution.

On July 4, 1789, President George Washington signed the Tariff Act of 1789, one of the first major laws enacted by the new federal government.

The legislation imposed duties on imported merchandise, providing an important source of revenue at a time when the country had no permanent federal income tax.

According to the U.S. House of Representatives, James Madison played a central role in advancing the legislation, which also sought to protect American economic interests.

Collecting tariffs at ports was relatively straightforward compared with establishing a nationwide system of direct taxation. As international commerce expanded, customs duties became essential to financing federal operations.

The importance of tariffs during this period was substantial.

According to the American Historical Association, import duties accounted for approximately 90% of federal government receipts during the period from 1790 to 1860.

This meant that the federal government's ability to finance its activities depended heavily on the movement of goods through American ports.

As American manufacturing developed, tariffs increasingly served a second purpose beyond raising revenue.

Domestic manufacturers wanted protection from imported products that competed with goods produced in the United States.

Higher tariffs made foreign merchandise more expensive, potentially giving American businesses an advantage in their domestic market.

However, the benefits and costs were distributed unevenly across the country.

Manufacturing interests generally supported higher import duties, while agricultural exporters and consumers often favored lower rates.

These competing interests became particularly visible during the debate over the Tariff of 1828, commonly known as the Tariff of Abominations.

The legislation imposed higher duties on imported goods and generated strong opposition in Southern states, where the economy depended heavily on agriculture and international commerce.

According to the U.S. House of Representatives, the legislation passed the House on April 22, 1828, by a vote of 105 to 94. President John Quincy Adams signed it into law on May 19.

The controversy contributed to the Nullification Crisis, during which South Carolina challenged the federal government's authority to enforce tariff legislation.

Congress eventually passed the Compromise Tariff of 1833, providing for gradual reductions in duties.

The dispute illustrated how tariff policy could become a major source of economic and political conflict between different regions of the United States.

During the second half of the 19th century, protection of domestic industries became an increasingly important objective of U.S. tariff policy.

The Tariff Act of 1861, commonly known as the Morrill Tariff, raised duties on imported goods. Additional increases followed during the Civil War.

Higher tariffs remained a prominent feature of American economic policy throughout much of the following decades.

Supporters argued that protective duties helped American manufacturers compete against established foreign producers and supported domestic employment.

Opponents maintained that tariffs increased costs for consumers and businesses that depended on imported materials.

The United States experienced substantial industrial growth during this period, particularly in industries such as steel, textiles, machinery, and transportation equipment.

However, industrial expansion cannot be attributed to tariffs alone.

Investment, technological innovation, population growth, infrastructure development, and access to natural resources also contributed to the country's transformation.

Economic historian Douglas Irwin, writing in the Annual Review of Economics, identifies protection of domestic producers as the dominant objective of American tariff policy from the Civil War through the early 1930s.

One of the most important changes in U.S. tariff history occurred in 1913.

That year, the ratification of the 16th Amendment established Congress's constitutional authority to levy federal income taxes without apportioning them among the states.

The federal government could increasingly finance its operations through direct taxation rather than relying primarily on import duties.

Congress also passed the Underwood Tariff Act in 1913, substantially reducing import tariffs.

According to the Congressional Research Service, the legislation lowered tariff rates from approximately 40% to 25%.

The development marked a fundamental change in federal fiscal policy.

Tariffs continued to generate revenue, but income taxes gradually became a far more important source of government funding.

This transition gave policymakers greater flexibility to use tariffs for trade and industrial objectives rather than primarily to finance government operations.

Perhaps the most widely discussed tariff legislation in American history is the Smoot-Hawley Tariff Act of 1930.

Signed by President Herbert Hoover during the early stages of the Great Depression, the legislation increased import duties across numerous agricultural and manufactured products.

The original objective included protecting American farmers facing declining agricultural prices.

However, the legislative process expanded the scope of protection to additional industries.

The result was one of the most significant increases in U.S. tariff protection of the 20th century.

Several trading partners responded with retaliatory measures, contributing to rising international trade barriers at a time when economic conditions were already deteriorating.

Global commerce contracted sharply during the Great Depression.

According to the U.S. Department of State's Office of the Historian, the value of U.S. imports from Europe declined from approximately $1.33 billion in 1929 to $390 million in 1932.

Over the same period, the value of U.S. exports to Europe fell from approximately $2.34 billion to $784 million.

These figures measure the dollar value of merchandise trade, not the physical volume of goods exchanged. They also reflect the broader economic collapse and falling prices, rather than the effects of tariffs alone.

Historians and economists continue to debate the precise contribution of Smoot-Hawley to the decline in world trade.

Nevertheless, the legislation became a prominent example of the risks associated with escalating trade restrictions and international retaliation.

The experience of the Great Depression contributed to a major change in American trade policy.

In 1934, President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act.

Rather than requiring Congress to negotiate and approve every individual tariff reduction, the legislation authorized the president to negotiate reciprocal trade agreements with other countries.

The law allowed tariffs to be reduced by as much as 50% in exchange for concessions from trading partners.

According to the U.S. Department of State, the Roosevelt administration concluded agreements with 19 countries between 1934 and 1939.

This represented a significant departure from the protectionist approach that had characterized much of the previous century.

The underlying principle was reciprocity.

The United States could reduce barriers to foreign goods while negotiating improved access for American exports in overseas markets.

Trade policy increasingly became a means of expanding international commerce rather than primarily restricting imports.

Following World War II, the United States played a central role in developing a more structured international trading system.

In 1947, 23 countries concluded the General Agreement on Tariffs and Trade, commonly known as GATT.

The agreement established a framework for reducing tariffs and addressing discriminatory trade practices.

Over subsequent decades, participating countries negotiated successive rounds of tariff reductions.

The goal was to encourage international commerce while establishing common rules governing trade relationships.

The framework eventually developed into the World Trade Organization (WTO), established in 1995.

The WTO expanded the international trading system by providing rules covering goods, services, intellectual property, and trade dispute procedures.

According to the Congressional Research Service, the development of GATT and the WTO contributed to declining international tariff rates and greater access to foreign markets.

For much of the postwar period, successive American administrations generally supported trade liberalization through bilateral, regional, and multilateral agreements.

One of the most significant developments in modern U.S. trade policy occurred in 1994, when the North American Free Trade Agreement entered into force.

NAFTA created a framework for reducing trade barriers among the United States, Canada, and Mexico.

The agreement gradually eliminated numerous tariffs on qualifying goods traded among the three countries.

It also established rules governing investment, intellectual property, and other aspects of cross-border commerce.

NAFTA became an important component of North American economic integration, particularly for industries with production networks spanning multiple countries.

However, the agreement also generated political debate over manufacturing employment, international competition, and the distribution of economic benefits.

In 2020, NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA).

According to the Office of the United States Trade Representative, the USMCA entered into force on July 1, 2020.

The newer agreement retained much of the regional trade framework while updating provisions covering automotive production, labor standards, intellectual property, and digital trade.

U.S. trade policy began shifting toward greater use of tariffs during Donald Trump's first presidential administration.

Beginning in 2018, the United States imposed additional duties on imported steel and aluminum under Section 232 of the Trade Expansion Act of 1962.

The administration also introduced tariffs on numerous Chinese products under Section 301 of the Trade Act of 1974.

These measures reflected concerns about national security, industrial competition, intellectual property practices, and the United States' economic relationship with China.

The tariffs generated additional government revenue and increased costs for certain imports.

A 2023 study by the U.S. International Trade Commission examined the economic effects of these measures over the period from 2018 through 2021.

The commission found that U.S. importers bore nearly the full cost of the tariffs examined, as import prices increased approximately in line with the additional duties.

The study also found that tariffs reduced imports and increased production in certain protected American industries.

However, higher input costs negatively affected some downstream manufacturers that used tariffed materials.

These findings demonstrate that tariffs can simultaneously benefit particular domestic producers while increasing costs elsewhere in the economy.

President Joe Biden maintained many of the tariffs introduced during Trump's first administration.

Rather than broadly eliminating the existing restrictions, the administration increasingly focused on industries considered important to American manufacturing and economic security.

In 2024, the Biden administration announced additional increases on selected Chinese products.

According to the Office of the United States Trade Representative, the measures included raising tariffs on Chinese electric vehicles to 100% and increasing duties on other products, including certain batteries, semiconductors, and solar cells.

These measures were targeted at particular product categories rather than representing a uniform tariff on all Chinese imports.

The approach illustrated a growing emphasis on industrial policy and supply chain security within U.S. trade policymaking.

Tariffs became an even more prominent part of U.S. economic policy after Donald Trump returned to the presidency in January 2025.

The administration introduced sweeping additional import duties, including measures imposed under the International Emergency Economic Powers Act (IEEPA).

The scope and legal basis of these measures soon became the subject of significant litigation.

On February 20, 2026, the U.S. Supreme Court ruled that IEEPA did not authorize the president to impose tariffs.

The ruling invalidated the administration's use of that statute to establish the disputed duties.

The administration subsequently terminated those tariffs and began the process of issuing refunds.

On February 24, 2026, the administration imposed a temporary 10% import surcharge under Section 122 of the Trade Act of 1974.

Those duties expired on July 24, 2026.

The government then implemented additional tariffs under other statutory authorities.

Among the most significant measures was a new round of Section 301 duties of 10% or 12.5% on imports from 60 economies, subject to product exemptions and other applicable provisions.

The measures followed investigations into whether trading partners had adopted and effectively enforced restrictions on goods produced using forced labor.

Additional tariffs also remained in place on specific products and trading partners under other trade laws.

An October 2026 Congressional Research Service report documented the growing range of presidential tariff actions, including duties affecting steel, aluminum, automobiles, pharmaceuticals, and other goods.

These developments highlighted the continuing importance of the legal authority used to impose tariffs, as well as the relationship between Congress and the presidency in determining American trade policy.

The changes introduced in 2025 and 2026 substantially increased the average duties applied to American imports compared with the preceding years.

According to the Penn Wharton Budget Model, the observed average effective U.S. tariff rate increased from 2.3% in January 2025 to 7.1% in August 2026.

The model calculates this rate using customs duties as a percentage of the value of imported merchandise, based on data from the U.S. International Trade Commission.

The Congressional Budget Office presented a different measure in August 2026.

Using tariff policies in effect through July 31 and weighting rates according to the composition of U.S. imports in 2024, the CBO estimated an effective tariff rate of approximately 10%.

The difference reflects an important distinction between observed collections and estimates based on tariff schedules.

Observed effective rates incorporate the goods that businesses actually import, including changes in sourcing and purchasing behavior. The CBO's estimate holds the composition of imports constant to measure the effects of tariff policy.

Consequently, the two figures should not be interpreted as directly comparable measurements of the same activity.

The rates also vary significantly by country and product, meaning an economy-wide average does not represent the tariff that every importer pays.

More than two centuries after their introduction, tariffs continue to influence American economic policy.

Their importance extends beyond the revenue they generate for the federal government.

Tariffs affect the prices of imported goods, the competitiveness of domestic producers, and the costs faced by companies that depend on international supply chains.

They can also influence where businesses invest, manufacture products, and purchase materials.

For policymakers, tariffs offer several potential benefits, including protecting strategically important industries, responding to foreign trade practices, and creating leverage in international negotiations.

However, higher tariffs can also increase costs for American businesses and consumers, encourage retaliation by trading partners, and reduce access to foreign markets.

The economic consequences depend on which products are covered, the level of the duties, available alternatives, and how businesses and consumers respond.

The history of U.S. tariffs illustrates the changing balance between these objectives.

From providing approximately 90% of federal revenue in the early republic to becoming a central instrument of modern trade policy, tariffs have repeatedly evolved alongside the American economy.

The fundamental debate has remained remarkably consistent throughout that history.

How should the United States balance the protection of domestic economic interests with the benefits of international trade?