As the year ends, a partial and brief ceasefire seems imminent in Donald Trump’s trade war on the world. The United States and China may sign a deal as early as next month. But make no mistake: The protectionist impulse behind the trade war remains as ineradicable as ever.

Nor should it be forgotten that economic nationalism has guided the destiny of all major nations since the 19th century. 

According to the ideological prejudices of the present, built up over nearly four decades of globalization, free trade and deregulation represent the natural order of things. History, however, tells us that the United States was a protectionist power for much of its existence, and the tariff was a crucial factor in its dethronement of Britain as global economic leader by the early 20th century.

As William McKinley put it in 1890: “We lead all nations in agriculture; we lead all nations in mining; we lead all nations in manufacturing. These are the trophies which we bring after twenty-nine years of a protective tariff.”

The argument for economic nationalism against a manufacturing giant such as Britain was simple. British free-traders claimed that their ideology was best placed to bring prosperity and peace to the world. Their critics in countries less economically advanced than Britain, such as Germany’s Friedrich List, the 19th century’s most influential economic theorist, argued that free trade could only be a goal rather than the starting point of modern development.

Economic self-strengthening for nations required that they protect their nascent industry until it becomes internationally competitive.

Notwithstanding Britain’s rhetoric, which periodicals like the Economist amplified, it had arrived at free trade after a successful policy of tariffs. It also used military power to acquire foreign markets for its surplus goods and capital.  

In the late 19th century, one aspiring power after another set out to match the British; the Americans were not alone. Italy, while seeking to modernize its economy, imposed massive tariffs on France. Germany and Japan nurtured domestic manufactures while trying to shield them from foreign competition. 

Even Britain, following its settler colonies Australia, Canada and South Africa, came to abandon free trade by 1932. The United States’ protectionism peaked with the infamous Smoot-Hawley Tariff Act of 1930.

The U.S. moved swiftly to embrace free trade after the Second World War only because its manufacturing industries, dominant over the world’s war-ravaged economies, needed access to international markets. 

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