Active History

This is the first post in a three-part series on the history of tariffs. You can read the introduction by David Webster here.

Heather McKeen – Edwards

The idea of tariffs is far from new, politically or economically. In fact, most countries in the world have some tariffs right now. Tariffs are a type of trade barrier, and their goal is usually to slow down imports for a variety of domestic reasons. Historically, governments used them to build their own domestic industry by making the foreign versions of goods more expensive, thus reducing consumer demand for those goods. In today’s world this logic could be framed as an effort to ‘reshore’ industries that have moved overseas.

Beyond industrial development, there are two other common economic reasons for countries to apply a tariff. The first is compensation for perceived unfair trade practices in a sector. Somebody is doing something to manipulate the market, like dumping their goods cheaply in your country. That’s not fair, so you can compensate or retaliate by putting tariffs in place, though usually after trying a process of dispute settlement at the World Trade Organization (WTO) or other dispute-settlement mechanism first. The second is national security. Countries in general are usually concerned about giving up control over certain industries, particularly those that are strategically important. For example, if you don’t have any capacity to produce your own steel, it can affect security and military autonomy. We may see Trump invoke national security in justifying tariffs as it is one of the reasons in US law that he can unilaterally impose tariffs, but security aspects are not necessarily the underlying reason. In fact Trump has presented a myriad of inconsistent reasons in his rationale for tariffs over the past year. 

David Webster
— Tariffs on you!
— No, bigger tariffs on you!
— No, I have the biggest, most beautiful tariffs, and I am slapping them on you!

Anyone could be excused for thinking it was a battle of toddlers. But this is deadly serious: a trade war, one that reminds us of moments of trade tension between Canada and the United States in the past. Only this time, it’s supersized.

Canada has historically balanced its trade between the imperial mother in Britain (the Conservative favourite) and the upstart Uncle Sam (more beloved by Liberals). When the United States slapped tariffs on Canada, trade soared with the UK. The first PM, John A. MacDonald, boasted of his “National Policy” that would nurture infant Canadian industries behind tariff walls. Wilfrid Laurier sought “unrestricted reciprocity” (freer trade had fancier names back then) with the US, and was resoundingly thumped in the 1911 election for it, by the pro-British nationalist Tory Robert Borden. The North American neighbours converged as the Second World War loomed in Europe and Britain’s weakness forced Canada into the loving embrace of Franklin D. Roosevelt’s and his New Deal. Mackenzie King stopped just short of a free trade deal, fearing “the fate of Sir Wilfrid,” who always had sage advice to offer to King from beyond the grave.

Gradual, deepening trade embrace and political alliance seemed the unalterable destiny of the US and the country North of America throughout the Cold War, with Lester Pearson and Lyndon Johnson’s Auto Pact perhaps the best symbol of neighbourliness. Then came Brian Mulroney, who finally got the Free Trade Agreement that had been considered so many times before. No more trying to diversify trade – Mulroney was all-in on the American gamble. And for years, it seemed to be fulfilling some of what he promised when he fought and won the 1988 election on this issue – more prosperity in a more integrated continental economy.

What would Mulroney make of recent events?

Canada is now faced with an existential crisis over President Donald Trump’s tax increases, which he calls tariffs. Trump threatens to destroy the Canadian economy, as a way to annex the country. And yet, few people actually know what a tariff is, or how trade policy works, now and in the past.

To help clear up the issues, at least for a small number of Canadians, a group of colleagues at Bishop’s University held a forum on the history, politics and economics of tariffs, in January of 2025. This forum, which will run over the next three days, offers a series of reflections in edited articles.

First, political economist Heather McKeen-Edwards offers a primer on the economics of tariffs, demystifying a lot of the topic. Next, historian Gordon Barker surveys the US history of tariffs (spoiler: there have been a lot them over the decades). Finally, Gilbert Gagné reflects on the politics of tariffs, drawing on his expertise as a leading political scientist of NAFTA, as we used to call the now-defunct North American Free Trade Agreement. Together, these articles aim to help us understand the history and the issues behind the “dumbest trade war” in a long time.

Eric W. Sager

I did not expect to publish a book towards the end of the eighth decade of my life. And if you had asked me, ten years ago, whether I would write a book about the meaning of history, I would have declared such a thing to be impossible. In retirement, however, I found myself determined to try to answer basic questions about the scholarly discipline that has absorbed my life. The project was at first entirely for my own edification. As I proceeded, I was persuaded that there might be something of interest to others, and so I decided to seek a publisher, and to persist with the search despite rejections. The story of what follows says something about rewards for persistence, and perhaps also something about our relationship with publishers – a relationship in which we historians may have more influence than we may realize.