Connect with us

American News

U.S. Tariff Policies: A Historical Perspective

Published

on

Paris (Imran Y. CHOUDHRY) :- Former Press Secretary to the President, Former Press Minister to the Embassy of Pakistan to France, Former MD, SRBC Mr. Qamar Bashir analysis : Since its inception, the United States has oscillated between protectionist tariffs and free trade policies, shaping its economic and industrial landscape. Initially, tariffs were a primary revenue source for the federal government and a tool to protect fledgling industries from foreign competition. Over time, shifting economic priorities, political ideologies, and evolving global trade relations influenced U.S. tariff policies, each shift bringing both advantages and drawbacks. Protectionist tariffs have historically strengthened domestic industries but also led to trade disputes and higher consumer costs, while free trade policies have fostered global economic integration but often resulted in job losses in vulnerable sectors.
In the late 18th and 19th centuries, the U.S. relied on high tariffs to shield its developing industries from European competitors. The Tariff of 1816 and the Tariff of Abominations (1828) promoted Northern manufacturing by making foreign imports more expensive. However, these same policies harmed Southern agricultural exporters, who relied on overseas markets for cotton and tobacco sales. The Morrill Tariff (1861), introduced during the Civil War, reinforced protectionism, helping Northern industries but exacerbating regional tensions.
During this period, the United Kingdom, France, and Germany were America’s key trading partners. The UK, dependent on U.S. cotton for its textile industry, suffered the most from these tariffs. European manufacturers faced steep restrictions on their goods entering the U.S. market, leading to retaliatory tariffs that restricted American agricultural exports. This resulted in economic polarization, with industrialists in the North benefitting from tariff protections while Southern farmers and exporters suffered from declining international demand. Industries such as steel (Carnegie Steel), railroads (Union Pacific, Central Pacific), and manufacturing (Singer Sewing Machines, Colt Firearms, McCormick Harvesting Machines) thrived under these protectionist policies. However, Southern agriculture and the shipping industry struggled due to the loss of foreign markets. While tariffs fostered domestic industrial growth, they also deepened economic disparities and intensified sectional tensions that contributed to the Civil War.
The early 20th century saw fluctuations between free trade and protectionism, reflecting changing economic conditions. The Underwood Tariff (1913) under President Woodrow Wilson lowered tariffs significantly, improving trade relations with the UK, Germany, and France but reducing government revenue. However, the Fordney-McCumber Tariff (1922) reversed this trend, reinstating protectionist measures to support U.S. industries like steel, chemicals, and automobiles. While these tariffs strengthened domestic production, they provoked retaliatory tariffs from European nations, limiting U.S. exports and creating economic inefficiencies.
The Smoot-Hawley Tariff (1930) under President Herbert Hoover significantly worsened the Great Depression by imposing some of the highest tariffs in U.S. history. This move triggered retaliatory measures from America’s key trading partners, collapsing global trade and accelerating the economic downturn. The U.S. economy shrank as agricultural and industrial exports plummeted, exacerbating the financial struggles of businesses and workers.
In response to the failures of extreme protectionism, the Reciprocal Trade Agreements Act (1934) under Franklin D. Roosevelt marked a decisive shift toward free trade. This act allowed the U.S. government to negotiate mutual tariff reductions with other countries, laying the groundwork for global economic cooperation. After World War II, this approach culminated in the General Agreement on Tariffs and Trade (GATT, 1947), promoting trade liberalization worldwide. Industries such as automobiles (Ford, General Motors), consumer goods (General Electric, RCA), and aircraft manufacturing (Boeing, Lockheed Martin) flourished due to expanding export markets and international cooperation. However, textiles and small-scale manufacturing struggled to compete with lower-cost imports, leading to job losses in some traditional American industries.
The impact on GDP was significant. While protectionist policies like Smoot-Hawley led to economic contraction, the shift toward free trade agreements fueled post-war prosperity, with U.S. GDP growing at an annual rate of 4%–5% in the 1950s and 1960s. However, as globalization accelerated, certain domestic industries faced intense foreign competition, leading to deindustrialization in some sectors.
The 21st century initially embraced globalization and free trade, with agreements like NAFTA (1994) and China’s WTO entry (2001) under Presidents Clinton and Bush expanding trade with Canada, Mexico, China, and the European Union. These agreements led to a surge in U.S. exports, particularly in technology (Apple, Intel, Microsoft), aerospace (Boeing), and agriculture (soybeans, corn, wheat). However, they also contributed to manufacturing job losses, as companies moved production to countries with lower labor costs. Domestic steel, textiles, and small manufacturing industries suffered as cheaper imports flooded the U.S. market, fueling political and economic discontent.
Under President Trump (2017–2021), the U.S. imposed tariffs on Chinese imports, steel, aluminum, and European goods, triggering a trade war aimed at protecting domestic industries. While these tariffs boosted U.S. steel and semiconductor production, they also raised costs for businesses dependent on foreign materials, such as automotive (General Motors, Ford), construction, and consumer electronics (Apple, Dell, HP). China retaliated with tariffs on American agricultural products, significantly impacting soybean and pork producers. The Biden administration (2021–2025) maintained most of these tariffs while focusing on domestic supply chains, semiconductor manufacturing (Intel, TSMC in Arizona), and renewable energy, benefiting defense and steel industries while hurting retail and agriculture due to higher import costs.
The impact on GDP was mixed. While globalization drove U.S. economic growth in the 1990s and early 2000s, with GDP expanding at 2%–3% annually, the U.S.-China trade war under Trump slowed investment and disrupted supply chains, causing GDP growth to drop to around 2% in 2019. Under Biden, continued tariffs contributed to inflation but also encouraged domestic industrial investment in semiconductors and clean energy.
In recent weeks, global stock markets have suffered sharp declines, largely due to escalating trade tensions and the impact of new tariffs. Major indices like the Dow Jones Industrial Average and the S&P 500 have experienced substantial losses, reflecting investor fears of an economic slowdown and the potential onset of a global recession. The energy sector has been particularly affected, with natural gas prices rising due to geopolitical instability and increased demand, leading to higher operational costs for industries reliant on energy.
However, there is potential for market recovery if specific conditions are met. A reduction in energy prices could lower production costs for businesses, improving corporate earnings and boosting investor confidence. Additionally, if protectionist trade policies successfully revitalize domestic manufacturing, the economy could see long-term benefits, reducing reliance on foreign imports and strengthening key industries. This could help stabilize financial markets and support economic growth.
While the short-term outlook remains uncertain, strategic policy adjustments—such as lowering energy prices, improving supply chain efficiency, and negotiating trade agreements that balance protectionism with economic openness—could pave the way for a more stable and prosperous market environment. If domestic industries adapt successfully, the U.S. economy may regain momentum, mitigating the negative effects of tariffs and restoring confidence in global markets.

American News

What Hungary’s Orban did – and didn’t – get from Trump

Published

on

By

On the surface, the Hungarian prime minister’s trip was exactly what he went to Washington for: luxuriant praise and an exemption from sanctions on Russian oil, gas and nuclear supplies.

And all that just five months out from a difficult election.

Look closer, however, and the picture is less clear cut. The US side struck a hard trade deal – and an expensive one for Hungary.

And there’s no progress on Viktor Orban’s biggest headache: ending the war in neighbouring Ukraine, and with it the long shadow the conflict casts over Hungary.

Let’s look first at Orban’s key win – an exemption from US sanctions, which a White House official told the BBC was time-limited to one year, although Péter Szijjártó, Hungary’s foreign minister, said would be indefinite.

The time span is interesting. Trump clearly wants to help his friend win the election in April. And the exemption even partially dovetails with the European Commission demand to all member states to end the import of Russian oil, gas and nuclear fuel by the end of 2027.

What is missing, from an EU perspective, is any political commitment from Orban to meet that demand – a commitment made and fulfilled by the Czech government. And the EU is trying to tighten energy sanctions – to the fury of Hungary and Slovakia.

Away from the media spotlight, the Hungarian energy company MOL has been upgrading two of its refineries – Százhalombatta in Hungary and the Slovnaft facility in Bratislava – to process Brent crude instead of the high-sulphur Urals crude which flows through Russian pipelines.

On Friday, MOL said 80% of its oil needs could be imported through the Adria pipeline from Croatia, albeit with higher logistical costs and technical risks.

So Orban’s argument, which so impressed Trump, that Hungary, as a landlocked country, has no alternative to Russian oil may not strictly be true.

Overall, Hungary and Slovakia have together paid Russia $13bn (£10bn) for its oil between its full-scale invasion of Ukraine in February 2022 and the end of 2024.

The one-year window granted by the US is nevertheless a valuable respite for Hungarian households this winter.

Orban told pro-government reporters who travelled with him to Washington that otherwise utility bills “could have gone up by up to three times in December”. Capping those bills by various means has been a central plank of his popularity in Hungary since 2013.

Under the US exemption, Hungary can also continue to buy Russian gas through the Turkstream pipeline, which traverses the Balkans, and pay for it in hard currency ($185m in August alone) using a Bulgarian loophole. Orban has agreed to buy LNG from the US worth $600 million, according to Bloomberg.

Another key part of the Washington deal is nuclear.

Hungary agreed to buy US nuclear fuel rods for its Paks 1 nuclear power station (at a cost of $114m), in parallel to those bought from Russia’s Rosatom and France’s Framatome.

Russian plans to finance and build the nuclear extension, called Paks 2, have been long delayed by technical and licensing issues. The US agreement to lift all nuclear sanctions on Hungary may help restart that project, but thorny problems remain.

Hungary has also agreed to buy US technology to extend the short-term storage of spent nuclear fuel at Paks for between $100m and $200m.

Continue Reading

American News

US to boycott G20 in South Africa, Trump says

Published

on

By

Donald Trump has said the US will not attend the G20 summit in South Africa over widely discredited claims that white people are being persecuted in the country.

The US president said it was a “total disgrace” that South Africa is hosting the meeting, where leaders from the world’s largest economies will gather in Johannesburg later this month.

South Africa’s foreign ministry described the decision by the White House as “regrettable”.

None of South Africa’s political parties – including those that represent Afrikaners and the white community in general – have claimed that there is a genocide in South Africa.

Trump posted on his social media platform Truth Social: “It is a total disgrace that the G20 will be held in South Africa.

“Afrikaners (people who are descended from Dutch settlers, and also French and German immigrants) are being killed and slaughtered, and their land and farms are being illegally confiscated,” he wrote.

“No US government official will attend as long as these human rights abuses continue.”

Trump had earlier said South Africa should not be in the G20 at all, and that he would send vice-president JD Vance, instead of attending himself.

But now the White House says no US official will go.

Reuters  Cyril Ramaphosa sits in the Oval Office next to Donald Trump in May 2025.
Donald Trump confronted South African President Cyril Ramaphosa in May

Every year, a different member state hosts the G20 and sets the agenda for the summit – with the US due to take its turn after South Africa.

The South African foreign ministry said in a statement: “The South African government wishes to state, for the record, that the characterisation of Afrikaners as an exclusively white group is ahistorical.

“Furthermore, the claim that this community faces persecution, is not substantiated by fact.”

Since returning to office in January, Trump has repeatedly accused South Africa of discriminating against its white minority, including in May when when he confronted his South African counterpart Cyril Ramaphosa in the Oval Office.

The Trump administration has given Afrikaners refugee status, stating a “genocide” is taking place in South Africa. Last week, the White House announced plans to cap refugee admissions at a record low, and give priority to white South Africans.

South Africa’s government said the claims of a white genocide is “widely discredited and unsupported by reliable evidence” and pointed to the “limited uptake” of this offer by South Africans.

The claims were dismissed as “clearly imagined” by a South African court in February.

The G20 was founded in 1999 after the Asian financial crisis. The nations involved have more than 85% of the world’s wealth and its aim was to restore economic stability.

The first leaders’ summit was held in 2008 in response to that year’s global financial turmoil, to promote international co-operation.

Now the leaders get together each year – along with representatives of the European Union and African Union – to talk about the world’s economies and the issues countries are facing.

Continue Reading

American News

Conservative justices sharply question Trump tariffs in high stakes hearing

Published

on

By

Donald Trump’s sweeping use of tariffs in the first nine months of his second term was sharply questioned during oral arguments before the Supreme Court on Wednesday.

Chief Justice John Roberts, and justices Amy Coney Barrett and Neil Gorsuch – three conservative jurists considered swing votes in this case – peppered US Solicitor General John Sauer, representing the president’s administration before the court.

They were joined by the court’s three liberal justices, who also expressed scepticism about whether federal law – and the US Constitution – give the president authority to unilaterally set tariff levels on foreign imports.

“The justification is being used for power to impose tariffs on any product from any country in any amount, for any length of time,” Roberts said.

If the court ruled for Trump in this case, Gorsuch wondered: “What would prohibit Congress from just abdicating all responsibility to regulate foreign commerce?”

He added that he was “struggling” to find a reason to buy Sauer’s arguments.

In a possible sign of case’s complexities, the hearing stretched almost three hours – far longer than the time formally allotted.

Arguing over ‘country-killing’ crises

The case centres around a 1977 law, the International Emergency Economic Powers Act (IEEPA), that Trump’s lawyers have said gives the president the power to impose tariffs. Although the Constitution specifically vests Congress with tariff authority, Trump has claimed that the legislature delegated “emergency” authority to him to bypass longer, established processes.

Sauer asserted that the nation faced unique crises – ones that were “country-killing and not sustainable” – that necessitated emergency action by the president. He warned that if Trump’s tariff powers were ruled illegal, it would expose the US to “ruthless trade retaliation” and lead to “ruinous economic and national security consequences”.

Trump first invoked IEEPA in February to tax goods from China, Mexico and Canada, saying drug trafficking from those countries constituted an emergency.

He deployed it again in April, ordering levies from 10% to 50% on goods from almost every country in the world. This time, he said the US trade deficit – where the US imports more than it exports – posed an “extraordinary and unusual threat”.

Those tariffs took hold in fits and starts this summer while the US pushed countries to strike “deals”.

Lawyers for the challenging states and private groups have contended that while the IEEPA gave the president power to regulate trade, it made no mention of the word “tariffs”.

Neil Katyal, making the case for the private businesses, said it was “implausible” that Congress “handed the president the power to overhaul the entire tariff system and the American economy in the process, allowing him to set and reset tariffs on any and every product from any and every country, at any and all times”.

He also challenged whether the issues cited by the White House, especially the trade deficit, represent the kind of emergencies the law envisioned.

Suppose America faced the threat of war from a “very powerful enemy”, Samuel Alito, another conservative justice, asked. “Could a president under this provision impose a tariff to stave off war?”

Katyal said that a president could impose an embargo or a quota, but a revenue-raising tariff was a step too far.

For Sauer, this was a false choice. Presidents, he said, have broad powers over national security and foreign policy – powers that the challengers want to infringe on.

Tariffs v taxes

A key question could be whether the court determines whether Trump’s tariffs are a tax.

Several justices pointed out that the power to tax – to raise revenue – is explicitly given to Congress in the Constitution.

Sauer’s reply was that Trump’s tariffs are a means of regulating trade and that any revenue generated is “only incidental”.

Of course, Trump himself has boasted about the billions his tariffs have generated so far and how essential this new stream of funding is to the federal government.

The justices spent very little time on questions about refunds or whether the president’s emergency declarations were warranted. Instead they spent most of their time examining the text of IEEPA and its history.

Sauer urged them to understand tariffs as a natural extension of other powers granted to the president under the law rather than a tax. “I can’t say it enough – it is a regulatory tariff, not a tax,” he said.

But that appeared to be a stumbling block for many of the justices.

“You want to say that tariffs are not taxes but that’s exactly what they are,” Justice Sotomayor said.

Many seemed persuaded by arguments from the business and states that tariffs, as a tax paid by US businesses, were fundamentally different from the other kinds of powers addressed by the law.

But not all.

Justice Kavanaugh expressed doubts on that point toward the end of the hearing, saying it didn’t seem to very “common sense” to give the president the power to block trade entirely, but not impose a 1% tariff, sugggesting it left a gap like a donut hole.

“It’s not a donut hole. It’s a different kind of pastry,” Gutman responded, drawing chuckles in the crowd.

What the court’s ruling could do

Treasury Secretary Scott Bessent, who attended the hearing, made no comment when asked by the BBC what he thought of the hearing. Secretary of Commerce Howard Lutnick, also in court, flashed a thumbs-up.

US Trade Envoy Jamieson Greer was in court, along with Minnesota Senator Amy Klobuchar, who said outside after arguments that she was “hopeful” based on the questions asked that the court would overturn the tariffs.

“I thought they were very good questions,” she said, describing tariffs as an “unconstitutional power grab” by the president.

The hearing drew a full audience, with press pushed into overflow seats behind columns.

If a majority of the Supreme Court rules in Trump’s favour, it will overturn the findings of three lower courts that already ruled against the administration.

The decision, no matter how it works out, has implications for an estimated $90bn worth of import taxes already paid – roughly half the tariff revenue the US collected this year through September, according to Wells Fargo analysts.

Trump officials have warned that sum could swell to $1tn if the court takes until June to rule.

During oral arguments, Barrett grappled with the question of reimbursing such revenue, wondering if it would be a “complete mess”.

Katyal responded by saying that small businesses might get refunds, but bigger companies would have to follow “administrative procedures”. He admitted that it was a “very complicated thing”.

In remarks on Wednesday, press secretary Karoline Leavett hinted that the administration already is looking at other ways to impose tariffs if the Supreme Court rules against them.

“The White House is always preparing for Plan B,” she said. “It would be imprudent of the president’s advisors not to prepare for such a situation.”

Continue Reading

Trending