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How the U.S. has used tariffs through history — and why Trump is different

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2 years ago

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Shipping containers are seen at the Port of Montreal in Montreal, Canada, on Feb. 3, 2025. 

Andrej Ivanov | Afp | Getty Images

President Donald Trump imposed broad tariffs on China on Tuesday, while tariff threats hang over other major trading partners like Canada, the European Union and Mexico.

That may lead some to wonder: How have tariffs been wielded through U.S. history, and is Trump unique in his use of them?

The ‘three Rs’ of tariffs

The U.S. has used tariffs since its founding in the 18th century.

In fact, the Tariff Act of 1789 was among the first bills ever passed by Congress.

Since then, the U.S. has used tariffs to achieve three broad goals, said Douglas Irwin, an economics professor at Dartmouth College and past president of the Economic History Association.

Irwin calls them the “three Rs” — revenue, restriction (import barriers to protect domestic industry) and reciprocity (a bargaining chip to cut deals with other countries).

Using tariffs for revenue

Tariffs are taxes on U.S. imports, paid by the entity that’s importing the foreign good. Those taxes raise revenue to help fund the federal government.

For roughly the first third of the nation’s history — from its founding until the Civil War — the revenue motivation was “paramount” as a driver to impose import duties, Irwin said. The federal government relied on tariffs for about 90% or more of its revenue during that period, he said.

China is likely to retaliate far stronger on tariffs than others, says SoFi’s Liz Young Thomas

But things changed after the Civil War, Irwin said. The U.S. started to impose other taxes, like excise taxes, that made the nation less reliant on tariffs.

Tariffs generated about half of federal revenue from about 1860 to 1913, when the income tax was created, Irwin said.

The scale of the government expanded significantly in the 1930s — with the creation of New Deal programs like Social Security — and later for defense spending during WWII and the Cold War, said Kris James Mitchener, an economics professor at Santa Clara University who studies economic history and political economy.

Today, “tariffs simply cannot raise enough revenue to fund government expenditure,” Mitchener said. “There’s no possible way you could support the size of the U.S. military on tariff revenue.”

Restriction and reciprocity

From the Civil War to the Great Depression, the U.S. primarily used tariffs as a restrictive measure on imports, to insulate the domestic market from foreign competition, Irwin said.

For example, the Tariff Act of 1930, popularly known as the Smoot-Hawley Tariff, levied protective tariffs on roughly 800 to 900 different types of goods, accounting for about 25% of all goods imported to the U.S., Mitchener said.

Then, the post-Depression era — especially the post-World War II period — ushered in an era of “reciprocity,” Irwin said.

The U.S. helped create the General Agreement on Tariffs and Trade in 1948, the precursor to the World Trade Organization, which set global rules for trade and ushered in an era of low tariffs.

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That said, the U.S. also used tariffs as a reciprocal bargaining chip before WWII.

For example, before the U.S. annexed Hawaii, it signed a free-trade agreement with the Kingdom of Hawaii in 1875. The treaty allowed for duty-free imports of Hawaiian sugar and other agricultural products into the U.S. In exchange, the U.S. got exclusive access to the harbor that would later be known as Pearl Harbor.

How the president’s tariff power grew

U.S. import taxes before the WWII era were pretty high, ranging from 20% to 50%, sometimes even reaching 60%, Irwin said. They have been “very low” since 1950 or so, he said.

The average duty on goods subject to a tariff was about 2% to 4% in the 2010s before Trump’s first term, Mitchener said.

“That’s what President Trump is trying to overturn, this sort of low period of tariffs we’ve had since World War II,” Irwin said.

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Before 1934, it was Congress — not presidents — that had power over tariff rates and negotiations, said Andrew Wender Cohen, a history professor at Syracuse University.

But Democrats — then known as the political party of free trade — had an enormous majority around the New Deal era and passed the Reciprocal Trade Agreements Act of 1934, granting the president the right to negotiate tariffs in certain cases, Cohen said.

“That’s when the president gains a much more substantial authority,” Cohen said.

That power accelerated after 1948 during the “transformation of the whole global economic order,” he said.

Why Trump tariff policy is ‘very unusual,’ economists say

President Donald Trump in the Oval Office of the White House on Feb. 03, 2025. 

Anna Moneymaker | Getty Images News | Getty Images

That said, Trump’s use of tariff policy is “very unusual” among modern U.S. presidents, Cohen said.

For one, Trump “likes all three Rs” — revenue, restriction and reciprocity, Irwin said.

For example, on the campaign trail, he suggested that tariffs could replace the U.S. income tax to fund the government. He said during his campaign that they would create U.S. factory jobs and has threatened to use them to strongarm Denmark to give up Greenland.

However, there are tradeoffs, Irwin said. For example, restricting imports somewhat negates tariffs’ ability to raise revenue, because it diminishes the tax base for tariffs, he said. (Those additional duties may cause companies to import less or push people to buy less, for instance.)

“You can’t really achieve all three objectives at same time,” he said.

Additionally, no previous president has tried to link a U.S. drug crisis to trade policy, as Trump did with fentanyl.

“That’s a novel take,” Mitchener said.

Many presidents have used tariffs. For example, George W. Bush, Ronald Reagan and Richard Nixon applied tariffs to protect the U.S. steel industry, as Trump did in his first term, Irwin said.

“What’s unusual about Trump is, he’s not just picking out particular industries that he thinks are of strategic importance, but he’s blocking imports across the board almost with some of these countries,” Irwin said.  

Trump imposed a 10% additional tariff on all Chinese goods, for example, and threatened a 25% tariff on imports from Canada and Mexico.

“No president in recent memory has really used tariffs across the board or in a broad-brush way to achieve various objectives,” Irwin said. “They’ve sort of adhered to the rule that we belong to the WTO. That means we keep our tariffs low as long as other countries keep their tariffs low.”

Cohen agreed.

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Global trade treaties, like the United States-Mexico-Canada Agreement (USMCA) Trump signed in his first term, establish a mechanism for nations to file grievances for alleged unfair trade practices, Cohen said. Nations can generally raise tariffs as a retaliatory measure if trade rules are breached, per the treaty terms, he said.

Trump’s recent unilateral tariff announcements are unique in this regard, he said.

“I can’t think of any precedent for that,” Cohen said.

“While the executive branch was given much more power since 1934, it’s always been subject to the specific terms of the agreements,” he said.

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$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

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6 days ago

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August 8, 2026

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The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

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Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

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1 week ago

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August 7, 2026

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Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

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Personal Finance

Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

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2 weeks ago

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August 1, 2026

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As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

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