Not since the 1930s has the subject of tariffs stirred such bitter controversy. The monumental Smoot-Hawley Tariff Act of 1930 having become the official scapegoat for the Great Depression, the custodians of Acceptable Thought have long relegated tariffs to the ash heap of discredited ideas. Tariffs, bleats the commentariat unceasingly, are one of those quaint ideas of early American bumpkins that have been shown by sophisticated modern economics to be incompatible with free trade and amiable international relations. 

Quite a number of the pioneering partisans of liberty, including Frédéric Bastiat, Ludwig von Mises, and Richard Cobden, were opposed to tariffs, and many modern-day libertarians, conservatives, and others with a penchant for limited government agree with them.

On the other hand, tariffs were and are opposed with equal ferocity by the Left. Already in the 19th century, Marxists and Fabian socialists alike excoriated tariffs as tools of the wicked capitalist, and that antipathy has only grown with time. As Karl Marx himself wrote in 1848: 

The system of protective tariffs places in the hands of the capital of one country the weapons which enable it to defy the capital of other countries; it increases the strength of this capital in opposition to foreign capital, and at the same time it deludes itself that the very same means will make that same capital small and weak in opposition to the working class.

Statements such as this have prompted even the likes of Reason, a libertarian magazine, to claim that Marx, an alleged champion of free trade, understood the subject better than Donald Trump. In 2019, Reason’s Damon Root observed that “Marx had a number of positive things to say about what we now call globalization,” and recommended that Trump “spend a little time studying Karl Marx” to cure his ignorance on free trade.

But tariffs met with nearly unanimous approval from at least one reputable school of thought: the American Founders. Almost to a man, the Founders regarded tariffs as the least objectionable form of taxation, at least as far as the United States was concerned. Tariffs became the primary source of revenue for the federal government, and remained so until well into the 20th century, during which time America and her economy grew as no country in prior history. 

With his full-throated advocacy of tariffs, President Trump is a voice from another age, urging as he does a return to a tariff-centered system of federal revenue collection, instead of the modern fiscal model of heavy direct taxation coupled with money creation. Trump and his supporters have portrayed tariffs as a panacea for many of America’s economic, financial, and political ills. But are they right?

The tariff man cometh: Trump announced sweeping new tariffs on “Liberation Day,” April 2. The potential benefits of a tariff-based revenue system are many, and Trump deserves credit for rehabilitating tariffs after nearly a century of neglect.  (AP Images)

Beware of Selfish Pleading

If the legacy media is to be believed, the new Trump tariffs have infuriated Wall Street billionaires, as well as, by some accounts, Trump’s right-hand man, Elon Musk. The concerns are as hackneyed as they are self-serving: Tariffs, it has long been argued, far from having a punitive effect on foreign governments or economic competitors, fall wholly on domestic consumers. There is more than a little truth to this, at least in the short run. But such protests are being voiced the loudest by many contemporary titans of industry who have benefited handsomely by being able to offshore production to China and elsewhere. When a Ray Dalio or an Elon Musk criticizes tariffs against China, for example, it must be borne in mind that theirs are not the voices of dispassionate reason but of what economist Henry Hazlitt once called “the special pleading of selfish interests.” Pro-free trade economists, who ordinarily are quick to detect such special pleadings, often have a blind spot where tariffs are concerned; they tend to assume that only pro-tariff special interests are susceptible to selfishness. However, the beneficiaries of the tariff-less system of misnamed “free trade” are just as apt to favor a status quo that benefits them, regardless of the consequences for the economy, national security, or the livelihoods of American workers.

The status quo that our captains of industry are defending is not new, as Trump is quick to point out. For the entirety of living memory, and most definitively since the end of World War II, the United States has generally avoided levying significant tariffs. To exert policy pressure on foreign governments, modern American political elites have favored trade sanctions and boycotts over tariffs. To raise revenue, the modern federal government uses direct taxation such as the income tax, as well as deficit spending and monetary expansion. Even as most of the rest of the world maintains heavy tariffs on American goods, our policy, until very recently, has been not to respond in kind but to leave our doors wide open for foreign trade and investment. 

At the same time, many of the supposed advocates of free trade push for ever-higher taxes and ever-greater regulatory burdens to be imposed on domestic producers, thus incentivizing international economic growth while discouraging it at home. The result has been predictable: Over the last several decades, there has been a veritable stampede of American corporations rushing to offshore their production to countries where bureaucratic red tape and taxes are more amenable to business than in the United States.

Despite how the debate has been framed, tariffs are not merely, or even primarily, an economic issue; they have profound political, societal, and constitutional ramifications that must be taken into account for a fully informed picture of this contentious subject.

Tariffs and the Constitution

First of all, we need to consider tariffs in the context of the U.S. Constitution. That tariffs writ large are constitutional is beyond dispute — but, as Article I, Section 8 makes clear, they are, like other forms of taxation, the exclusive prerogative of Congress. In the very first clause of that section, Congress is delegated the power to “lay and collect Taxes, Duties, Imposts and Excises” — which, of course, includes tariffs. Not only that, two clauses later, Congress is also empowered to “regulate Commerce with foreign Nations.” 

And tariffs are not merely another broad menu of revenue-raising options available; for the Framers of the Constitution, tariffs were the form of taxation most congruent with limited government. This is because tariffs are an indirect form of taxation that is ultimately elective in character. Absent market distortions from government activity, American industry will tend to produce most needed goods, with foreign-manufactured goods being restricted to luxury items and other exotica. And while it may be true that modern American consumers benefit from, say, fresh fruits and vegetables being available year-round thanks to imports from warmer climes, this is not the case with manufactured items such as cars, machinery, tools, lumber, medical supplies, munitions, aircraft, computers, chips, and so forth. All of these, and much more besides, could and should be profitably manufactured in the United States, a state of affairs that requires only drastic tax and regulatory reforms to bring about.

As we at The New American have been (until very recently) almost alone in pointing out, presidential tariffs such as those that Trump has been imposing willy-nilly are completely unconstitutional. The executive branch’s power over revenue is limited to the president’s signing bills of appropriation and taxation into law or vetoing them if he sees fit. And that includes levies in the form of tariffs. Up to the infamous Smoot-Hawley Tariff Act of 1930, this was how tariffs were always enacted.

The modern conceit that presidents can levy tariffs at will and without congressional say-so dates, as with so much of illegitimate Big Government, to President Franklin Delano Roosevelt’s New Deal. In June 1934, Congress passed the Reciprocal Trade Agreements Act, which gave FDR and all successive presidents the authority to change tariff rates by up to 50 percent. Implicit in the bill’s passage was that FDR and his successors could be trusted to phase out tariffs in favor of income and other direct taxes (such as corporate taxes and capital gains taxes), as well as the deft new financing trick of deficit spending coupled with inflation. The New Dealers’ Brave New World, after all, was really just a warmed-over implementation of the communist program in Karl Marx’s Communist Manifesto. That document urged for the creation of a proto-communist order in which an all-encompassing leviathan state was financed by a heavy, progressive income tax and a central bank with a monopoly over the money supply. In such a world, tariffs were to become an anachronistic afterthought — which is why tariffs have always been discouraged by Marxists. 

But, in order to guarantee the Marxist outcome of endless inflation coupled with heavy, progressive, direct taxation, the power over tariffs needed to be taken from Congress and reassigned to a pliant executive branch.

Until Trump, the Marxist grift worked perfectly. Every one of FDR’s successors, Democratic and Republican alike, faithfully hued to the anti-tariff mantra. Most ordinary Americans remain blissfully ignorant of how stridently tariffs have been attacked by Marxists, Fabian socialists, and their ilk as paramount tools of capitalist and imperialist domination.

Offshore: America’s tariff-less fiscal policies, along with the globalization of trading regulations under the World Trade Organization, have driven most domestic manufacturing overseas. (AP Images)

Now, of course, Trump’s many enemies, including a few Senate Republicans, are trying to pass legislation to take the tariff power away from him. In the House, H.R. 2665, the Trade Review Act of 2025, was introduced on April 8 with bipartisan sponsorship. Said Representative Jeff Hurd (R-Colo.), one of the bill’s sponsors:

As a constitutional conservative, I am proud to co-lead the Trade Review Act of 2025, reasserting our congressional responsibility in imposing tariffs. Article I, Section 8 of the Constitution is clear: “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises.” This isn’t a political issue for me. I believe Congress must reclaim its constitutionally mandated authority, and I would support this measure regardless of who is in the White House.

Added Representative Don Bacon (R-Neb.):

The Constitution clearly gives the authority for taxes and tariffs to Congress, but for too long, we have handed that authority to the executive branch. This is less about the actual tariffs laid by the Trump Administration, some of which I support because they are reciprocal, but more a commitment to uphold the Constitution. Congress has the power of the purse. Our Founders created checks and balances for a reason. 

Fine rhetoric, to be sure, and, in the case of freshman congressman Hurd, for whom we have no legislative data points yet, the professed solicitude for the Constitution may prove genuine. In the case of his GOP colleague Don Bacon, however, it is worth noting that his cumulative voting record has yielded a Freedom Index score of only 47 percent (with his most recent, the 118th Congress, being an abysmal 35 percent), putting him firmly in RINO territory. Nevertheless, both are right: The U.S. president has zero constitutional authority to impose tariffs — and Congress had no authority to delegate to the executive branch powers conferred by the Constitution to the legislative.

As for the Democratic co-sponsors of the bill, Representative Gregory Meeks of New York had this to say:

For too long, presidents have wielded tariffs as political weapons rather than strategic tools. The Trade Review Act restores constitutional checks and balances by ensuring Congress has a voice before American families are hit with higher costs. If a president wants to raise taxes on the American people through tariffs, they should be required to explain why — and get Congressional approval to do it.

This has long been the posture of the Left, that presidents ought to have authority over tariffs, but that they should be used “strategically” rather than being “weaponized” — whatever those vacuous terms might mean. But in reality, “constitutional checks and balances” are not susceptible to congressional innovation; the checks and balances brought to bear on the congressional prerogative of levying taxes and spending money are simple: The president may veto any spending legislation he does not like, raising the bar for congressional passage. Congress, for its part, may ignore any and all presidential spending proposals, suggestions for levies, and so forth — or it may take them under advisement. But as Congressman Bacon correctly observed, Congress (and more specifically, the House), and not the president, has the power of the purse. 

Tariffs and Politics

As for the politics of tariffs, Trump is mostly right, even if he is exercising the power illegitimately. America is getting ripped off by the likes of Canada, Mexico, Europe, and China. All of these, and many others besides, have huge tariffs on American goods, tariffs that, somehow, nobody in the Establishment finds at all objectionable. This double standard is traceable on the Left to the dogma that, because America is so much unjustly richer than everybody else, tariffs help to level the playing field and redistribute global wealth. For many on the so-called Right who are devoted to the cause of “free trade,” tariffs are inhibitive of economic growth, and should be eschewed on principle, even if other countries refuse to do so. 

Both of these strands of argument completely miss two critical points, which Trump and at least some of his epigones, such as Peter Navarro, are trying to make, namely:  

1) Governments need some source of revenue, and tariffs are the least intrusive form of taxation (or, as Winston Churchill might have put it, tariffs are the worst form of taxation except for all the others). Otherwise put: If not tariffs, then what forms of taxation should be preferred in order to fund a limited government? Income taxes, graduated or otherwise? Perhaps some form of standardized poll tax? Capital gains taxes? Inflation? A uniform national sales tax, perhaps? 

This last (usually billed as a “flat tax”) has often been trotted out by “respectable” conservatives as an alternative to the income tax, while tariffs are seldom advocated. But such a national sales tax would be unavoidable for consumers, and most proposals advocate for very high rates, such as 10 or 15 percent. Tariffs, by contrast, are elective, once domestic production has attained proper levels: You only pay them if you opt to buy foreign goods for their cachet, their luxury, etc. 

But, cries the anti-tariff faction, tariffs are protectionist, and the international division of labor is just the free market optimizing the production of goods! They ask: Would you put tariffs on mango importers and encourage Americans to grow tropical fruit in greenhouses instead, at much higher cost and lower quality? These types of hyperbolic arguments ignore the fact that the vast majority of offshored industry in our time has not been pushed away because the climate or natural resources elsewhere are better; they have left because political conditions have incentivized them to do so. Else how can it be explained that, in spite of the vast distance and cost involved in trans-Pacific shipping, in spite of the constant need of language training and training in Western business practices, in spite of the risk cost of doing business in countries with fickle authoritarian or even communist governments — in spite of these and many other factors, it still has become more economical for American corporations to sink vast resources into building and maintaining manufactories in China, Vietnam, Indonesia, and elsewhere overseas, only to ship the finished products all the way back to Walmart shelves in the American heartland? This has occurred over the last several decades because taxes and regulations have made it prohibitively expensive and time-consuming to set up or continue to operate on American soil. It is certainly not because conditions for manufacturing quality and efficiency in China and elsewhere are somehow vastly superior to those in the United States. Thus, the “mangoes in a greenhouse” canard is a straw-man argument where most economic activity is concerned.

2) All products are not created equal. In particular, manufacturing capacity (or lack thereof) has a severe impact on national security. Like it or not, trading with enemy regimes can result in the transfer of critical military technology, or can lead to said regimes using their control over critical products such as pharmaceuticals or rare earth elements to exact concessions. We should have learned this during the Covid era, when we found ourselves dependent on China for medical supplies. Less recently, it was trade concessions to China in the mid-1990s that resulted in their acquisition from American aerospace corporations the technology to build working ICBMs that now threaten us. So, trade in tropical fruit, or tchotchkes like the inventory on Temu, is one thing, but trade in critical technology and supplies is quite another.

The Economics of Tariffs

What about the economic ramifications of tariffs? Strictly speaking, tariffs — like all forms of taxation — do dampen and divert economic energies. But the proper question is whether they do so to a greater degree than the other forms of taxation mentioned previously. The verdict of history appears to be that they do not, at least where America is concerned. After all, the U.S. economy grew at an unexampled pace during the 19th century and well into the 20th, during the entire period when tariffs were the primary means of raising revenue. And that was during a time when the United States, unlike today, was in a state of near-constant war against the aboriginal population, and also fought a ruinous four-year civil war that dwarfed every other conflict in the 19th century aside from China’s Taiping Rebellion. Many of the tariffs enacted during that period were contentious, to be sure (the “Tariff of Abominations” of 1828 in particular), and tariffs played a role in triggering the Civil War itself. But the gargantuan American systems of taxation and inflation of the 20th century enabled two world wars, the Korean War, the Vietnam War, the Gulf War, countless other smaller wars worldwide, and the garrisoning of the entire planet by U.S. military forces. 

It is important to note that the arguments on behalf of free trade, which the American Founders both understood and embraced, with reservations, were developed in the context of an early modern Europe divided into hundreds of different sovereign and quasi-sovereign states, including a large number of what today would be called “microstates.” Few of these states enjoyed anything like the broad panoply of resources available to the inhabitants of the United States, then or now. Even today, in much of the Old World, from economic powerhouses in the Far East such as Japan, South Korea, Taiwan, and Singapore, through the Gulf States of the Middle East (not to mention Israel), to the myriad small and medium-sized countries that make up most of modern Europe, having insufficient national resources is the rule rather than the exception. And it bears adding that this same characterization applies even to the large states across Eurasia: Russia, Kazakhstan, Iran, India, and China all have various geographic and demographic conditions that preclude prosperous self-sufficiency. Russia has energy but little arable land. China has arable land but no energy resources. India has arable land but is too hot for the cultivation of staples such as wheat. And so forth. Under the tyranny of Old World geography, free trade, often leading to customs unions, trading leagues, and the like, is more than an abstraction; it is an imperative for national survival.

The United States, singularly blessed with varied landforms; with huge stocks of critical resources such as wood, iron, and petroleum; with an enormous navigable river system; and with a mostly temperate climate, has the almost unique potential for complete national self-sufficiency. (By contrast, much of Canada is non-arable, while Mexico is too dry and mountainous for large-scale agriculture.) In this respect, only Argentina in the Western Hemisphere has comparably varied topography and climate. The Founders, even before the great territorial acquisitions of the 19th century, already had a sense of this. The original 13 states had vast amounts of timber, iron ore, and other metals, while both America’s coastal and interior waters brimmed with fish. Farming was profitable from New England to the Deep South. Given the geographical advantages of the United States, the Founders perceived tariffs to be the least injurious form of taxation, since, in general, almost anything manufactured or otherwise produced abroad could equally be produced at home.

Sticker shock: The Trump tariffs will drive prices up in the short run. But, unlike direct taxes such as the income tax, tariffs can be avoided by restricting consumption. And in the longer run, they will lead to a re-shoring of our manufacturing. (AP Images)

The First Tariff

Accordingly, the very first piece of legislation passed by Congress under the new Constitution was the Tariff Act of 1789. The act was written and sponsored by James Madison himself, the “father of the Constitution” and a congressman in the First U.S. Congress. President George Washington signed the tariff into law without hesitation, the very first instance of a major piece of legislation being created according to the process laid down by the U.S. Constitution. In its final form, the act included levies of 50 cents per ton on goods imported in foreign ships and 30 cents per ton on foreign goods imported in American ships. The tariffs were partly a response to years of trade discrimination by European powers, especially Great Britain, against the fledgling United States, discrimination whereby the major powers imposed heavy duties against American goods, or even barred American vessels altogether. 

Even in 1789, there was disagreement over whether tariffs ought to be resorted to in order to protect domestic producers or merely as a means for raising revenue. In this debate, the verdict of economics is clear: protectionism is not a sound economic doctrine. It is, however, a defensible political doctrine, since certain industries may well be considered indispensable to national defense or self-reliance. Thus, while it may be true that a tariff imposed on imported medical supplies amounts to a tax on domestic consumers, who are then forced to pay more, is it really wise policy to allow chains of production to become so internationalized that we no longer have the ability to produce medical supplies domestically? Or automobiles? Or farm machinery? Or advanced weaponry? Or ships? Or any number of other items indispensable to national well-being? There are no easy answers to such questions, which is why the levying of tariffs is best entrusted to the deliberative process of legislation, as the Founders intended.

That tariffs are not in fact the economic tactical nuke that their detractors claim them to be is amply borne out by American economic history. The American economy grew like no other in history throughout the era when tariffs were the main source of government revenue. Not coincidentally, that era also predated the era of modern fiat currency, of the modern regulatory behemoth, and of modern income taxes, corporate taxes, FICA taxes, and capital gains taxes — all of which depress and disincentivize economic growth far more than the lowly tariff ever did.

At the time of this writing, all of the dire prognostications of a stock-market crash have failed to materialize. This is because, for all of their financial adroitness, Wall Street elites do not, in the main, understand how the real economy works — the economy in which regular people get dirty making stuff that people actually use. 

If there is a crucial lesson from our own history that we have so far failed to internalize, it is this: If we prioritize economics over political principles, we end up with a financial oligarchy that serves up cheap material goodies while keeping most Americans in lifelong economic and political bondage (i.e., the system that we now have). If, on the other hand, we prioritize political principles over economics, as most of the Founders did, we end up with good government, along with unrivalled economic strength as a bonus.

In sum: Trump’s tariffs are, in the main, the right thing being done the wrong way. Besides being a robust exercise in the much-neglected virtues of national independence and self-reliance, tariffs are a rebuke to the cause of “world order.” But bringing back the tariff system should not be undertaken in isolation. We should also jettison the income tax, the capital gains tax, and all other such taxes; bring back gold and silver money; and eliminate the Federal Reserve. Only then can tariffs truly be re-enshrined as the chief source of federal revenue. 

Moreover, this should all be done by Congress, with the support of the president, as it was done in 1789, instead of the other way around. If tariffs continue to be levied on President Trump’s initiative alone, it is almost assured that, the moment Trump leaves office, Congress will fall over itself to restore the old order of extortionate income taxes, irresponsible deficit spending, gratuitous inflation, punitive regulation — and nary a tariff to be seen.