A History of Tariffs

As markets remain volatile, we believe it’s important to explore one of the key contributing factors—tariffs. Tariffs play a significant role in shaping economic trends, influencing trade relationships, and impacting consumer prices.

To provide deeper insight, we’re sharing an informative whitepaper from Phil Blancato, Osaic’s Chief Market Strategist. This report offers research, analysis, and expert commentary on global events, market trends, and economic policies.

Here are some quick takeaways:

1. Tariffs Are a Tool for Economic and Foreign Policy

Tariffs are taxes on imported goods that serve three primary purposes: revenue generation, trade restrictions, and reciprocity. While they can protect domestic industries by making foreign goods more expensive, they can also lead to inflation and increased costs for consumers. In 2024, the U.S. collected $77 billion in tariff revenue, accounting for 1.5% of federal revenue.

2. Historical Lessons: The Great Depression and Globalization

The Smoot-Hawley Tariff Act of 1930 raised tariffs by 20%, triggering retaliatory tariffs from other countries and reducing U.S.-European trade by 66%, worsening the Great Depression. Post-WWII, countries reduced tariffs to encourage global trade, a trend that remained for decades—until recent shifts under the Trump and Biden administrations.

3. The Future of Tariffs: Strategic Use Over Broad Implementation

While past administrations have increased tariffs for economic leverage—such as Trump's 10% tariff on Chinese goods—broad, sweeping tariffs remain unlikely. Instead, tariffs today are used selectively to pressure trade partners while avoiding significant economic disruption. However, their overuse can increase inflation, slow economic growth, and strain international relations.

If you have any further questions let us know.