Politics
Reciprocal Tariffs Are Not Enough
Reciprocity may be rhetorically expedient, but it has always been incompatible with tariff protection and tariff revenue goals.
“Tariff reciprocity” sounds good, right? Not to anyone who has studied U.S. trade policy. As the seminal authority on trade, the former Ambassador Robert Lighthizer, recently put it to Tucker Carlson: “If we just do zero for zero, we’re going to get wiped out. We’re going to end up with nothing, because we don’t have the structure to compete on that basis.”
Lighthizer is correct. For over a century, U.S. tariff acts have empowered presidents to adjust tariffs to “non-tariff barriers” that effectively discriminate against U.S. exports. None of it works. Setting tariffs in reaction to policies in other countries doesn’t work, as demonstrated through generations of U.S. trade policy. The historical lessons from reciprocity efforts show much more pernicious effects on the domestic zeitgeist, and that reciprocity is incompatible with a pro-tariff policy of protection and revenue.
Reciprocity is immoral, anticompetitive, and leads to the foreign entanglements President George Washington cautioned against. Its ill effects were best summed up in 1903 by a statement of principles adopted by the American Protective Tariff League:
Reciprocity in competitive products by treaty is unsound in principle, pernicious in practice, and is contrary alike to the principle of protection, to the fair treatment of domestic producers, and to the friendly relations with foreign countries.
Reciprocity is neither ethical nor economic, since it seeks to benefit some industries by the sacrifice of others, which is the essence of injustice. As at present advocated, reciprocity is a policy of favoritism. It would tend to array industry against industry and section against section at home, and forment industrial retaliation and political antagonism abroad. Such a policy would open the door to the grossest favoritism in legislation, promote the growth of a corrupting lobby, and increase the power of debasing bossism. Such a policy has no justification in economics, statesmanship, ethics, or good politics.
True American policy is protection of all the opportunities and possibilities of the American market for American enterprise, and fair, equal treatment for all other countries, namely the equal right to compete for American business in the American market by the payment of American wages. This alone is honest protection, good Republicanism, and the true American Policy.
Unfortunately, the League’s cautionary warnings failed to carry the day. But history has since proved them right.
What are tariffs for? The first Congress of the United States provided their answer in the first sentence of the first Tariff Act, passed July 4, 1789:
Whereas it is necessary for the support of government, for the discharge of the debts of the United States, and the encouragement and protection of manufacturers, that duties be laid on goods, wares, and merchandise imported.
President Donald Trump and Secretary of Commerce Howard Lutnick know this history. Both men spoke during the campaign—at length, and in front of hostile audiences—about the importance of tariffs for revenue and protection.
Revenue and protection are not incompatible goals for tariff policy. Since the dawn of civilization, tariff schedules—lists of tariff rates for every imaginable product—have been posted at every civilization’s ports.
Some products’ tariff rates will have a revenue effect, some will have a protective effect, and some rates produce a bit of both for a given product. You can even enjoy both revenue and protective tariff rates on a single product through the use of what are called tariff rate quotas (TRQs). With a TRQ, you have an “in-quota” rate that can be a revenue tariff, and then an “over-quota” rate that is protective.
Tariffs were the preferred form of state revenue through most of history, including in the United States. In 1815, Congress asked Treasury Secretary Alexander Dallas to propose a budget for the United States, with instructions that two-thirds of the needed $24 million in federal revenue come from tariffs. Dallas returned a detailed memorandum guiding on how to use tariffs for revenue and protection, which informed the “Dallas Tariff” (Tariff Act of 1816) and created a lasting template for U.S. tariffs for generations. Nowhere were preferential tariff rates for certain countries contemplated.
In March 1824, when he was speaker of the U.S. House of Representatives, Henry Clay would go on to give one of the most famous speeches in Congressional history. Rejecting the premise that reciprocity would ever be possible with a foreign nation, Clay went to pains to demonstrate the futility of counting on export markets, especially for agricultural producers. Clay launched what became known as “the American System”: a combination of protective tariffs, federal funding for internal improvements, and a central bank.
The Whig Party, followed by the Republican Party, would largely carry on the American System into the 20th century. The United States would implement only two “reciprocal tariff” treaties between 1789 and 1891, and both provide cautionary lessons for today.
In 1854, like a bully pawning off a homework assignment to a weaker student, Britain successfully brow-beat the United States into its first “reciprocal” tariff agreement, a list of duty-free Canadian commodities. This treaty also involved plans for the U.S. annexation of Canada and a subsequent drive to replace America’s first income tax with tariffs, making it remarkably timely.
The story begins almost a decade before the treaty’s ratification, after the British Parliament infamously embraced free-trade policy with repeal of the “corn laws.” With Britain’s tariff on corn mostly abolished, and the tariff on lumber cut in half, Canada’s exports to her mother country collapsed. British merchants abandoned Canada for grain from the Danube and lumber from the Baltic.
Canadians were in trouble. On May 12, 1846, the Canadian parliament passed a resolution asking Britain to open negotiations with the United States for a reciprocal tariff treaty for Canada. Recognizing the distress in Canada, Britain authorized the Canadian provinces to set their own tariff rates. Canada promptly equalized its tariffs for the UK and U.S., seen as a necessary first step to preferential rates with the United States.
The British and Canadian legislatures felt they had a solid chance. The United States had maintained protectionist tariffs for most of the preceding decades back to the repeal of Jefferson’s Embargo Acts. This changed when Democrats replaced the Whig’s protectionist Tariff of 1842 with the “Walker Tariff” of 1846, named after U.S. Treasury Secretary Robert Walker. The Walker Tariff reduced rates on all products and completely eliminated “specific tariffs,” which are assessed on volume (that is, so many dollars per unit), not the importer’s declared value. With the Walker Tariff, all tariff rates were reverted to simple ad valorem percentages, assessed on whatever invoice the importer provides. Using ad valorem instead of specific tariffs typically substitutes protection for revenue. As Clay remarked at the time, “It is evident that on the ad-valorem principle, it is the foreigner who virtually fixes the actual amount of the duty paid. It is the foreigner who, by fixing that value, virtually legislates for us—and that in a case where his interest is directly opposed to that of our revenue.”
Despite the less protectionist Congress and the receptive Walker, there was insufficient interest in Washington to generate the momentum necessary for a reciprocal trade treaty with Canada. In 1848, a bill was introduced in the U.S. House, but stalled.
The economic situation continued to deteriorate in Canada. Lord Elgin, Canada’s governor general, wrote to the colonial minister that “property in most of the Canadian towns, and more especially in the capital, has fallen fifty per cent in value within the last three years. Three-fourths of the commercial men are bankrupt, owing to free-trade.”
Despite the dire situation in Canada, Britain proceeded to repeal her navigation laws, a significant blow to the maritime provinces of Nova Scotia, New Brunswick, and Prince Edward Island, which made use of preferential cabotage to promote a Canadian carrying and shipbuilding industry.
Then, in late 1849, just as Congress was preparing to address slavery in the Mexican Cession, a dramatic development in Canada grabbed headlines: A group of prominent Montrealers published the Montreal Annexation Manifesto, calling for the peaceful separation of the Province of Canada from Britain and union with the United States. This declaration sent shockwaves through the political press on both sides of the border.
The manifesto laid blame on Britain’s embrace of global free trade for making U.S. annexation necessary: “The reversal of the ancient policy of Great Britain, whereby she withdrew from the colonies their wonted protection in her markets, has produced the most disastrous effects upon Canada. In surveying the actual condition of the country, what but ruin or rapid decay meets the eye.”
Britain’s response? To stiffen her resolve and strengthen free trade by creating a new export market for Canadian products through a “reciprocal” trade deal with the United States.
It was very much a stick-and-carrot approach, heavy on the stick. On July 5, 1852, Britain sent a communication to the United States announcing that ships from the Royal Navy had been dispatched to assert fishing rights in a disputed 1818 treaty. American fishing vessels found violating Britain’s interpretation of the treaty would be seized. The United States sent Commodore Matthew Perry and the steam frigate Mississippi in response, but finding six armed British cruisers, the Maine and Massachusetts fishermen retreated.
The message was received; it was known in Washington “that Great Britain would not consider the settlement of the fishery question aside from reciprocal trade.”
Britain’s fisheries gambit was further aided by the Southern delegation in Congress, which was alarmed at the prospect of Canada joining the United States as a non-slave state. According to Republican Senators Jacob Collamer of Vermont and Zachariah Chandler of Michigan, “apprehension on the part of the South, in 1854, was what brought about the treaty.”
On June 5, 1854, Britain succeeded. U.S. Secretary of State William Marcy and Elgin signed the Reciprocity Treaty. It provided for the mutual enjoyment of the Atlantic coast fisheries north of the 36th parallel, reciprocal free trade in a number of agricultural commodities, and gave the United States free navigation of the St. Lawrence River and of the Canadian canals.
As would become the pattern throughout American history, however, the “reciprocal tariff” agreement benefited the other country at America’s expense. Representative Frederick Pike, a Republican from Maine, in a speech to Congress in 1862, laid out the results: “In 1854, we exported about three dollars for one of imports, and now, in the last two years, have imported about a million and a half more than our exports.”
Pike described the immoral nature of how the reciprocity treaty pitted producers and states against each other: “Massachusetts was willing to sacrifice the interests of Maine, if thereby she could get the cheap wood of New Brunswick and Nova Scotia.”
Pike condemned the foreign influence and money behind the reciprocity campaign: “It is well known that Canada spent considerable sums to aid in lubricating [the treaty’s] passage through the channels of official routine in this city.” Even today, the government of Canada continues to spend money throughout the United States attacking U.S. tariffs.
By 1864, Canadian exports to the United States benefiting from duty-free treatment were double that of the United States to Canada.
Ultimately, what would kill the Reciprocity Treaty would be its interference with much-needed tariffs for revenue. Congress had passed the first federal income tax in 1862, which managed to provide for nearly a quarter of the Civil War’s revenue, despite relying on voluntary compliance. But by 1864, the United States was $2.6 billion in debt with only $858,309 of cash on hand.
Revenue was needed, and Republicans were particularly incensed that reciprocity with Canada compelled the Treasury to forgo tariff revenue while collecting a domestic income tax: “There existed a feeling that the American producer should not be loaded with taxes, while at the same time the Canadian producer, who competed with him, contributed nothing to the revenue of our Government.” Several senators made statements in the chamber decrying the admission of duty-free imports while a domestic income tax system existed. Chandler said:
The citizens of Michigan are largely taxed for the support of this Government, taxed directly and indirectly ; taxed upon their income, and upon their products, and upon their consumption ; taxed in every way, while the inhabitants of Canada raise precisely the same articles, are engaged in the same business, and send their products here to compete with ours without contributing one dollar to the support of this Government.
At the end of the Civil War, Congress voted to give the one year’s notice per the treaty’s terms to withdraw, and on March 17, 1866, the Reciprocity Treaty with Canada was terminated.
The termination would prove a happy ending for both the United States and Canada. The following year, on July 1, 1867, realizing they could count on neither Britain nor the United States, the British provinces of Canada, Nova Scotia, and New Brunswick united into one federation called the Dominion of Canada. Canada’s first prime minister, Sir John A. MacDonald, would go on to implement Henry Clay’s American System for British North America. His government campaigned on a “National Policy” that embraced protective tariffs and Canada’s own transcontinental railway. The United States and Canada would spend the rest of the 19th century rapidly industrializing, raising the standard of living in both countries ahead of Europe, all under their respective protectionist tariffs. And indeed, by 1911, Canada out-protectionismed America, rejecting a second reciprocity treaty that year that had been pushed by the United States.
The Kingdom of Hawaii had first proposed a reciprocity treaty with the United States in 1855, but the effort was plagued with similar problems to Canada’s advocacy and did not benefit from the extra push by Britain.
Still, while the Canada Treaty was adopted partially by interests in both Washington and London on quelling annexation talk, the same cannot be said of Hawaiian reciprocity. As Senator Justin Morrill (R-VT) said in a March 18, 1875 speech, “The most potent argument now offered [in support of Hawaiian reciprocity] is the same suggestion that has heretofore been most prominently presented, as in 1855 and 1869, namely, that if we do not make this arrangement—so feeble are their numbers, so lamentably deficient are their resources—they will be compelled to lean upon some other power. Great Britain or New Zealand will snatch them up and they will be lost to us forever.”
Morrill still cautioned about the bad precedent of Republicans supporting a reciprocal tariff deal: “What may be done with King Kalakaua may be done with the Queen of Great Britain or the Autocrat of Russia.”
The Hawaiians (or more accurately, the sugar-plantation owners) were ultimately successful, with Hawaiian tariff-free reciprocity effective September 9, 1876. Joseph Nāwahī, a Hawaiian legislator, publicly predicted that the treaty would be “a nation-snatching treaty,” stating, “The Treaty of Reciprocity becoming law will be the first step of annexation later on, and the kingdom, its flag, its independence and its people will become naught.”
A modern observer may readily conclude that this treaty was a “success” insofar as Hawaii is now a U.S. state. After all, if reciprocity is a mere prelude to annexation, then ultimately, reciprocity is not incompatible with tariffs for revenue and protection.
But this glosses over the history and chronology. The annexation of Hawaii was not a smooth commercial union akin to the Alaska Purchase of 1867. As Congress would acknowledge in the Apology Resolution of 1993, the Kingdom of Hawaii was “overthrown” (Congress’s words) with U.S. military support.
Whether reciprocity was a necessary stepping stone to annexation is beyond the scope of this article. But a few observations are warranted. Reciprocity’s overwhelming benefit to Hawaii was for Hawaiian sugar exports, and on the American side, to sugar refiners in San Francisco. But there were losers: namely sugar-cane plantations in Louisiana and Florida, and western sugar-beet farmers, who were supplying approximately one-tenth of U.S. demand.
And as always, hard lessons were learned about the inadvisability of international supply chains. After the Hawaiian Reciprocity Treaty was ratified, between 1875 and 1890, U.S. consumption of Hawaiian sugar increased over 1,400 percent, cementing Hawaii’s economic dependence on U.S. exports. But in 1890, Congress was flush with more revenue than Congress knew what to do with. William McKinley, then chairman of the U.S. Ways and Means Committee, wanted to increase tariffs on manufactured goods, but was under tremendous pressure to offset those tariff increases with tariff cuts elsewhere. McKinley chose sugar, eliminating the tariff of two cents per pound (64 cents per pound today). Hawaii’s duty-free concession on sugar was now worthless, devastating Hawaii economically. U.S. sugar importers immediately switched to Cuba, while American planters in Hawaii set about plotting the overthrow of the queen.
Shortly after their successful revolution, the United States restored the sugar duty in 1894, seriously damaging Cuba’s newfound prosperity. Per the tariff historian John Dobson, “In a few months, Cuban revolutionaries had capitalized on the discontent of the impoverished Cuban peasants and had renewed a bloody fight for independence begun 25 years before. This conflict ultimately drew the United States into a war with Spain in 1898… Thus, the seemingly innocent juggling of the sugar duty had important consequences for the United States and for the world.”
Ultimately, McKinley’s 1890 nullification of Hawaiian reciprocity seems to have been a necessary step towards the country’s annexation.
A leading figure drawing the Republican Party, and the United States, away from isolationism and defense of the home market above all was James Blaine. A Congressman for Maine, Blaine was elected as Speaker of the House for the 41st Congress beginning in 1869. After President Ulysses Grant selected the protectionist Morrill to be his treasury secretary, Blaine was appointed to Morrill’s Senate seat. Blaine, like the rest of Maine’s delegation, had been opposed to the reciprocity treaty with Canada, but his views changed. Nominated by President James Garfield to be secretary of state in 1881, Blaine embraced reciprocal trade as a means to get ahead of European involvement in the Western Hemisphere. He negotiated tariff reciprocity treaties with Mexico in 1882, and with the Dominican Republic and Spain (for Cuba and Puerto Rico) in 1884. Nevertheless, protectionists in the Senate managed to stall consideration of Blaine’s treaties. None would be implemented.
International intrigue resulting from the Tariff Act of 1890 did not end with sugar and Hawaii. The Republican Party was now splitting into factions, those singularly focused on protecting the home market versus those led by Blaine who saw reciprocity as a means to create an American empire.
After the Democratic interlude of President Grover Cleveland’s first term, Blaine returned as secretary of state in 1890, convening the First International Conference of American States as one of his first orders of business. Blaine went so far as to push for a hemispheric customs union at the conference, but the idea had little support in Congress or from the other countries.
Nevertheless, in Congress, Blaine would win an important battle against McKinley that would cement reciprocity’s future ruination of protection. During congressional consideration of the Tariff Act of 1890, Blaine was victorious against McKinley over the inclusion of a reciprocity clause in the Tariff Act of 1890 (hereinafter, the Blaine Clause).
The Blaine Clause did seem innocent enough. While McKinley’s Tariff eliminated the duty on sugar, molasses, tea, coffee, and hides, Blaine’s Clause authorized the President to reinstate the tariffs against countries that treated U.S. exports in a “reciprocally unequal and unreasonable” fashion. McKinley, known as the “Napoleon of Protection”, opposed the Blaine Clause as an improper delegation of congressional authority. President Benjamin Harrison, however, sided with Blaine, which secured Blaine’s reciprocity clause in the Senate version of the bill, despite McKinley’s resistance. The so-called “McKinley Tariff” would become famous for containing the Blaine Clause despite McKinley’s opposition.
Blaine, by all accounts a master orator, was successful in persuading even some ardent protectionists that reciprocity was compatible with protection. In October 1890, the American Protective Tariff League published a column quoting from a speech Blaine gave in Canton, with the writer saying it “discredits forever and absolutely the Free Trade statements that Mr. Blaine had become indifferent to Protection, or personally hostile to members of the Republican party who did not accept or approve of his views upon Reciprocity.” The column assured protectionists that Blaine would only sacrifice revenue-tariffs (tariffs on certain commodities for which we were import-dependent) to promote exports, and never protective tariffs. This seems impossible to square with Blaine’s desire for a hemispheric customs union.
Marketing reciprocity as compatible with protection would be a major rhetorical strategy for globalist Republicans in the following decades.
Between 1891 and 1892, under Harrison, Blaine used his clause to secure 10 reciprocity treaties. Key agreements included those with Brazil, Spain (for Cuba and Puerto Rico), and several Latin American nations like the Dominican Republic, El Salvador, and Guatemala.
Blaine did not think annexation of all these countries was worthwhile. He genuinely believed in promoting international trade in the Western Hemisphere for its own sake, for the promotion of foreign entanglements. Blaine wrote privately to Harrison that only Hawaii, Cuba, and Puerto Rico “are of value enough to be taken.”
These reciprocity agreements set a terrible precedent, as unlike the Canada and Hawaii treaties, these new ones were not “treaties” per the Constitution’s Treaty Clause (Article II, Section 2, Clause 2). They did not require Senate approval, a novel executive power shift. The president would merely be using the Blaine Clause’s delegated power from Congress. This clause was challenged in court by an importer forced to pay duties per the President’s invocation of the clause, but the clause was upheld by unanimous Supreme Court judgment in Field v. Clark (1892).
Blaines’s treaties were immediately followed by the Panic of 1893, and Blaine’s health rapidly declined, leading to his death that year. Democrats dismantled McKinley’s tariff, replacing it with their Wilson-Gorman Tariff Act of 1894, effectively nullifying Blaine’s agreements and removing the clause.
The 1896 Republican Party platform declared “Protection and Reciprocity are twin measures.” And McKinley’s views on reciprocity, or at least the president’s use of tariff powers, had apparently changed by 1896 as he ran for the White House. In a recorded campaign speech from 1896, he declared, “Our creed embraces an honest dollar, an untarnished national credit, adequate revenues for the uses of the government, protection to labor and industry, preservation of the home market, and reciprocity which will extend our foreign markets.”
History has proven that protection and reciprocity are not, in fact, twin measures, or at all compatible, as Clay had so eloquently demonstrated back in 1824.
But the 1896 Republican Party had clearly subordinated the home market emphasis, despite still giving it a nod. The platform continued:
Resolved, That we favor such reciprocity measures as will enable the United States to secure a proper share of the markets of the world for the products of our labor and our manufactures, and to that end we favor the cession of our right to impose retaliatory duties upon the importations from any country which imposes unequal or discriminating duties upon the products of American labor or manufactures.
McKinley’s 1897 Dingley Tariff Act raised duties to a record 57 percent, yet included a reciprocity provision allowing negotiated trade deals. Treaties with France and others followed, though protectionism still held sway. Nelson Aldrich, the chairman of the Senate Finance Committee, championed protection, at least rhetorically.
By 1901, McKinley’s final speech—days before his assassination—pushed further, advocating tariff flexibility to boost exports. Theodore Roosevelt, succeeding him, initially maintained this balance. His administration negotiated reciprocity with Cuba in 1902, cutting duties by 20 percent, but faced resistance from protectionist “Old Guard” Republicans.
With the rise of the giant American “trusts” (monopolies and oligopolies) during this period, public sympathy for tariff protection was at a low. While the same Republican congress that had passed the McKinley Tariff of 1890 also passed the Sherman Antitrust Act, Republican presidents had failed to adequately make use of its antitrust authorities. In retrospect, failure to more vigorously enforce the Sherman Act surely led to the destruction of protection.
William Howard Taft’s presidency (1909–1913) marked the peak of this tension. The 1909 Payne-Aldrich Tariff aimed to lower rates, but Senate revisions led by Aldrich kept duties high (averaging 40 percent), alienating progressive Republicans who favored reciprocity and reform.
Cementing the shift in thinking, it was now Republicans pushing for reciprocity even with Canada. Taft’s push for a Canadian reciprocity agreement in 1911—proposing mutual tariff cuts—split the party. Progressives like Robert La Follette backed it for cheaper goods and markets, while protectionists saw it as betrayal. It was Canada’s rejection in 1911, fearing U.S. dominance, that killed the deal.
By 1912, the Republican split deepened. Roosevelt ran as a Progressive, splitting the vote and giving Democrats a trifecta with uber-globalist Woodrow Wilson as President. The 1912 Democratic Party Platform led with the proposition that protectionist tariffs were actually unconstitutional, a long since discredited argument made by Confederates decades earlier.
President Woodrow Wilson wasted no time working with the “Father of the Income Tax,” Cordell Hull, then a Tennessee congressman at Ways and Means, to eviscerate America’s longstanding protective tariff. They did so with their radical Revenue Act of 1913, drastically slashing tariffs and substituting that revenue with the new income tax and Internal Revenue Service. The protective tariff was now fully destroyed.
The First World War temporarily held off a flood of imports. When that surge did take off in 1919, wiping out American farmers, Democrats were eviscerated at the polls. In 1920, the GOP swept Congress and the presidency. The 67th Congress wasted no time in restoring tariffs for revenue and protection with the Emergency Tariff Act of 1921 and then the more sweeping Fordney-McCumber Tariff Act of 1922. The 1922 bill did a number of things:
It raised tariffs on a wide range of goods, including chinaware, pig iron, textiles, sugar, and rails, restoring duties to the high levels of 1907.
It increased tariffs from 60 to 400 percent on dyes, chemicals, silk and rayon textiles, and hardware;
The average ad valorem tariff rate for dutiable imports rose to about 38.5 percent
It was an incredible success. In 1923, tariff revenue surged to over $582 million, an increase of more than $200 million from the Democrats’ tariff. The Roaring ‘20s ensued:
Gross National Product from 1923 to 1928 grew roughly three percent annually;
The national war debt by was shrunk 34 percent;
By 1927 the unemployment rate was 3.3 percent, and
Significantly for the Trump administration, income tax was eliminated for 98 percent of the population.
Trump is serious about renewing this success. He has discussed using tariffs to replace the income tax with Congressional Republicans, although as of March 2025, Speaker Mike Johnson and Majority Leader John Thune have not shown much tariff ambition. On the revenue side, the Trump administration aims to raise anywhere from $400 billion to $1 trillion per year, and on the protection side, he has increased tariffs on automobiles, steel, and aluminum, and is poised to do so on copper and copper articles, lumber and wood articles, and medicines. On March 3, 2025, Trump channeled Clay’s American System speech from March 1824, pledging protection of the home market to American farmers. On March 12, 2025, when asked by host Stuart Varney on Fox Business’s Varney & Co. about the administration’s tariff strategy, Lutnick said, “The president is here to protect American workers. He’s here to protect American industry.”
The president has marked April 2 as Liberation Day, promising sweeping new tariffs for revenue. As of March 31, according to the Wall Street Journal, Trump has pushed his cabinet to embrace the “universal” tariffs he campaigned on, as opposed to country-specific reciprocal tariffs. This further evidences Trump’s bona-fide protectionist instincts.
The 1922 Tariff Act contained eight “reciprocity” provisions tied to specific products. Notably, Title I, Sec. 1, Par. 369 of the Act set the tariff on cars at 25 percent, much as Trump has just done. Paragraph 369 also mandated that if any other country charges more than 25 percent, then the United States will impose the same tariff as that country, up to a rate of 50 percent.
Title III, Sec. 315 the 1922 Tariff also gave the president broad authority to increase tariffs on any country if that country was found to discriminate against American exports in any manner.
While the United States had dabbled in “reciprocity” for a handful of commodities with a handful of countries, mostly for short periods of time, these were aberrations. Per a Senate finance report, “The United States consistently applied a single-schedule tariff to imports from all countries. Reciprocal treaties granting reductions from the general tariff rates were few in number at any given time.”
During the 1920s, Cordell Hull was, unfortunately, still ascendant, preparing to seal America’s subsequent ruin. He became chairman of the Democratic National Committee as well as a champion of America’s international creditors. Hull attacked the Fordney tariff on the basis that protective tariffs were making it harder for overseas vendors to export to America, and thus harder for them to earn dollars to repay their debts. He also attacked the settlements of debts owed to U.S. lenders that involved lenders accepting less profit.
Hull and his companions around the world who put creditors ahead of producers helped not only lay the foundation for the Great Depression, but exacerbated it. While the Smoot-Hawley Tariff Act of 1930 has been long defamed as playing a role in the Great Depression, no less than the former Federal Reserve Chairman Ben Bernanke and other leading economic historians have “largely blamed that catastrophe on the international gold standard.” As Ben Stein noted in the New York Times, “exports were only about 5 percent of the economic output of the United States… To say that the [Smoot-Hawley] Act, which applied to a distinct minority of imports and which raised tariffs generally by only about six percentage points, caused the Depression is almost comical.”
Nonetheless, with the Depression in full effect, Democrats swept Congress and the Presidency in 1932. Hull now represented Tennessee in the Senate.
Look in any textbook or ask any AI, and you can learn about the “Reciprocal Trade Agreements Act of 1934.” In fact, there was no such legislation. What actually happened is that Democrats amended the Tariff Act of 1930 (Smoot-Hawley) with legislation titled “An Act to Promote Foreign Trade.”
Much like with Blaine’s 1890 clause, it allowed the president to adjust tariff rates based on mere “executive agreement” (no Senate ratification necessary). But that’s where the similarities ended. Hull’s 1934 amendment (hereinafter the Hull Clause) allowed the president to eliminate duties on any item, and worse yet, cemented an “Unconditional Most Favored Nation (MFN) Principle.”
Lest there be any doubt about the motivations, Section 3 of the Hull Clause stated that “Nothing in this Act shall be construed to give any authority to cancel or reduce, in any manner, any of the indebtedness of any foreign country to the United States.” Hull gave himself blanket authority to throw domestic producers under the bus so that foreign countries could export more to earn more dollars to repay their debts. But not a single dollar of that indebtedness was to be forgiven.
Hull’s clause permanently launched the presidential tariff era, and to this day Congress has not passed a Tariff Act since 1930.
The Hull Clause stated that any tariff cuts proclaimed by the president “shall apply to articles the growth, produce, or manufacture of all foreign countries, whether imported directly, or indirectly” (emphasis added). This is known as “Unconditional MFN,” which applies tariff reductions made to one trade partner to all countries with which the U.S. has trade agreements. Whereas under the Blaine Clause a tariff cut for Brazil was just that, a tariff cut for Brazil, under the Hull Clause the tariff cuts for the 1935 “Reciprocal” Trade Agreement with Brazil applied to virtually the entire world.
In the subsequent decade, Hull, now secretary of state, entered into 30 trade agreements with 29 foreign nations (he did Canada twice), each one cutting U.S. tariffs globally and on a non-reciprocal basis. This was the end of America’s protective tariff.
Hull’s tariff cuts really did apply globally: the Japanese Empire, Nazi Germany, it made no difference. Hull was virulently anti-tariff, and nothing was more important than lenders foreign debts being repaid through exports back to America.
The Hull Clause did contemplate other countries using “non-tariff barriers” to thwart American exports. It authorized the president to “suspend the application [of the tariff cut to] any country because of its discriminatory treatment of American commerce.” Presidents have had all the tools necessary to deal with lack of genuine reciprocity, but until President Trump, all were overwhelmingly reluctant to use those powers.
After the war, in 1947, Hull’s 30 trade agreements were collapsed into the global General Agreement on Tariffs and Trade (GATT), a non-reciprocal tariff agreement with 22 other nations.
By 1950, the average rate of duty paid on goods imported into the U.S. had fallen to 5.8 percent, and 60 percent of all goods were imported duty-free. Imports from the Soviet-controlled Eastern Bloc became a bridge too far, however. Trade policy was in the service of international lenders, but now also in fighting international communism. President Dwight Eisenhower signed into law the Trade Agreements Extension Act of 1951. The American tariff schedule was split into “Column 1” and “Column 2.” Column 1 contained negligible tariffs for GATT countries and other non-communist countries, while Column 2 contained higher rates from the Tariff Act of 1930. Section 5 of the 1951 Act directed that communist nations be moved to Column 2. Column 1 and 2 remain today, but as of March 2025, Belarus, Cuba, North Korea, and Russia are the only countries in Column 2.
Congress did get wise to the lack of reciprocity at the outset of the GATT “Tokyo Round” in the early 1970s. Industries from flatware to bicycles had largely been wiped out, with temporary GATT-authorized “safeguard” tariffs only slowing the bleed-out. Congress legislated “Reciprocal nondiscriminatory treatment” as part of the Trade Act of 1974, and it remains the law today (see 19 U.S. Code § 2136).
The president would only be allowed to proclaim the latest round of tariff cuts if he could certify that we had achieved reciprocity with Canada, Europe, and Japan. The president did so, and indeed, we got it. Ever since, Japan has charged zero tariffs on U.S. cars, while we have charged Japan 2.5 percent. Under this reciprocal regime, Japan sends us 77 cars for every one car we send them. And President Trump stands virtually alone inside the Beltway in identifying this first as a problem, and second as one that can be remedied through tariffs.
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