Understanding Tariffs: Insights from John Steele Gordon

In his incisive essay, “Tariffs in American History” (1), historian John Steele Gordon provides a sweeping survey of the role tariffs have played in shaping the United States' economic and political evolution. He treats tariffs not as a mere fiscal instrument but as an essential part of American development. Tariffs were a critical source of federal revenue and a tool of national industrial policy. His historical narrative reveals their change from economic protectionism to symbols of political discord.

The Federal Revenue Machine

Gordon points out the fiscal constraints that defined the early American republic. Before the Sixteenth Amendment in 1913, the federal government lacked a direct income tax. Instead, it relied primarily on customs duties for revenue. According to Gordon, tariffs were “easy to collect, hard to avoid, and widely accepted.” This highlights the initial rationale for imposing tariffs. In a new nation wary of central authority, tariffs were a politically acceptable means to finance federal functions.

However, tariffs also led to smuggling. Historians note that Rhode Island perfected this practice. Gordon humorously recounts the story of Samuel Slater's 'industrial espionage.' Slater memorized spinning and weaving machinery details. With the support of Rhode Island's Brown family, he established the first spinning mill operation in the New World.

This key point highlights the early American political economy. In the post-Revolutionary period, the federal government’s solvency depended on its ability to raise revenue. Customs duties filled the Treasury's coffers and marked the emergence of national fiscal infrastructure. Thus, tariffs were foundational to the American state-building project.

Industrial Strategy and Regional Conflict

Gordon's essay becomes particularly compelling when he discusses tariffs as instruments of national development. They also sparked sectional conflict. He reminds readers that Alexander Hamilton, in his Report on Manufactures (1791), advocated protective tariffs to encourage American industries to compete with established European counterparts.

This policy framework, termed “the American System,” was championed by Henry Clay in the early nineteenth century. It laid the groundwork for a tariff-based industrial policy. Gordon cites America's response to British protectionism, which stimulated industry in northern states. While this policy boosted manufacturing in the North, it also deepened economic divisions with the agrarian South. The South relied heavily on imported goods and focused on export-driven cotton production. This tension ultimately culminated in events like the Nullification Crisis of 1832 and the ideological differences that led to the Civil War.

Gordon’s narrative effectively illustrates that tariffs, while economically rational in certain contexts, can produce unintended consequences. These tariffs often favor some regions or sectors at the expense of others. This zero-sum perception continues to shape political discourse today.

Twentieth-Century Transition

Gordon discusses the decline of tariff dominance in the twentieth century. With the federal income tax's ratification and the rise of global trade networks, tariffs became less important politically and fiscally. He characterizes the Smoot-Hawley Tariff of 1930 as a catastrophic mistake. It exemplified how protectionism can backfire amid global downturns, reinforcing the critique that tariffs can worsen economic hardships when misused.

Despite this decline, Gordon stops short of declaring tariffs obsolete. He acknowledges their persistent appeal in American politics, particularly during populist backlashes against globalization. In this context, “Tariffs in American History” offers not just a recounting of economic policy but a reflection on recurring themes in governance: nationalism, industrialization, fiscal federalism, and the ongoing struggle between free markets and protectionism.

Critical Reflections

While Gordon's prose is clear and his historical analysis impressive, some areas could benefit from further development. His essay primarily frames tariff policy within a national narrative, offering limited engagement with international perspectives. For example, how did American tariff practices compare to those of contemporaneous industrializing nations like Germany or Britain?

Additionally, the essay might delve deeper into the evolving economic theories surrounding tariff debates. It could highlight shifts from classical to neoclassical frameworks and the rise of supply-side and neoliberal critiques.

Gordon's somewhat sympathetic portrayal of early American protectionism could be balanced with a closer examination of the long-term costs. Insulating domestic industries from competition can lead to inefficiencies, price inflation for consumers, and diplomatic retaliation. Though not uncritical, his account tends to valorize tariffs as tools for nation-building and would benefit from addressing the complex trade-offs of deploying such policies.

Lessons for the Future

John Steele Gordon’s “Tariffs in American History” is a masterful synthesis of economic history and political narrative. It illuminates the centrality of tariffs in the American experience, not just as fiscal measures but as reflections of national purpose and regional struggle.

For scholars, policymakers, and informed citizens, Gordon’s essay serves as a cautionary tale. It invites us to reconsider how economic tools shape national destinies. In an age marked by renewed debates over trade and industrial policy, his historical perspective is more relevant than ever.

The exploration of tariffs offers insights into broader themes of governance and economic strategy that continue to resonate today. Reflecting on American tariff history allows us to engage with ongoing debates about protectionism and free trade, shaping future economic policies as we move forward.

(1) Gordon, J. S. (2025, May). Tariffs in American History. Imprimis, 54(5). Hillsdale College. https://imprimis.hillsdale.edu/tariffs-in-american-history