Filenews 6 April 2025 - by Michalis Paraskevas
From antiquity to the present day, tariffs have always been used to raise state revenues, protect local producers, and as a lever of political pressure.
Today, the issue is dramatically back in the news, following US President Donald Trump's decision to impose new very high tariffs on almost all US trading partners in April 2025, a move that is already causing global turmoil.
The first historical records of customs duties can be traced back to antiquity. During the 4th century BC. In Greece, the ultimate purpose of the tariffs was to save money for the city of Athens and Piraeus, through the trade sector.
The first duty is the 2% imposed on imported and exported products. They were port charges mainly, for the purpose of imposing the retail excise duty on basic necessities. The second duty was the Pentecost, which the Athenians demanded from their allies on imported and exported products.
Taxing trade, especially imported basic necessities, allowed the state to draw resources from the economic activity of foreign merchants and wealthy consumers, rather than directly burdening the municipality. It is no coincidence that the ancient Athenians avoided direct taxation of citizens and preferred revenues from customs duties.
Throughout history, tariffs and taxes on trade in general have often been a fuse for major political upheavals, from revolutions to wars.
In the mid-18th century, the debt-ridden British government imposed on American colonists a series of laws that regulated trade and increased taxation, such as tariffs on tea, glass, and other goods.
The colonies considered these measures unbearable and tyrannical. British intransigence and Parliament's refusal to lift or reduce tariffs was the reason that led to the outbreak of the American Revolution.
The slogan "no taxation without representation" became a cry of indignation. The tension accumulated by the trade regulations and taxation of this period eventually contributed decisively to the outbreak of the American Revolution (1775) and the Declaration of Independence the following year, in 1776.
In other words, tariffs were one of the sparks that triggered the first organized decolonization.
Tool of pressure or blackmail
In modern times, tariffs are still a tool of economic blackmail and geopolitical pressure between states. Beyond their economic dimension, they are used strategically to exert pressure or retaliate in international disputes.
China's relations with Australia deteriorated when the Australian government called for an international investigation into the origins of the COVID-19 pandemic. In response, Beijing implemented a series of informal trade sanctions. The most blatant measure was the imposition of an 80.5% tariff on Australian barley in May 2020, under the pretext that the product was being sold below cost (anti-dumping duty).
The Chinese tariffs were clearly seen as political retaliation: they targeted products that were symbols of the Australian economy (agriculture, wine), putting pressure on Canberra to tone down its criticism. This is a typical case where tariffs have acted as a lever of diplomatic pressure rather than as an economic policy measure in the strict sense.
After three years of dispute and Australia's appeal to the WTO, China finally lifted these tariffs in 2023–24, indirectly acknowledging their political character.
Smoot–Hawley Act of 1930
In the 20th century, the era of globalization and both world wars, tariffs gained a bad reputation as catalysts for economic crises. The Great Depression of 1929–1933 is a monumental case where protectionist tariffs, instead of saving the economy, plunged it deeper into crisis.
The culmination was the U.S. Smoot–Hawley Act of 1930, which drastically increased tariffs on hundreds of imported products into the U.S. Despite the warnings, Congress passed the bill and President Herbert Hoover signed it into law – ignoring an unprecedented letter of protest signed by more than 1,000 American economists, calling on him to veto.
Their fears were soon realized: the new tariffs triggered immediate retaliatory tariff increases from over twenty countries within two years.
Trapped in this spiral of protectionism, international trade flows collapsed – world trade declined by 65% between 1929 and 1934
The GATT Agreement
It deepened the recession internationally, leading to a loss of confidence and worsening unemployment. It is no coincidence that Smoot-Hawley has since been described as a "symbol of unaccountable protectionism" and an example to be avoided (Friedman, Wall Street Journal, 1987).
Indeed, later, at the time of the design of the global economic architecture after the Second World War, the countries established the GATT/WTO, with the main aim of drastically reducing tariffs internationally, in direct response to the lessons of the 1930s
Trump's attack
Now, today, these warnings are being put to the test as the United States, led by Donald Trump, reverts to aggressive tariff policy. On April 3, 2025, Trump surprised the world by announcing the imposition of high tariffs on products imported into the U.S
. The official justification is to protect American industry and workers from "unfair competition" and reduce the trade deficit.
Within hours of the announcements, panic prevailed in the stock markets worldwide. Wall Street recorded its biggest daily drop since June 2020, while Asian stock markets followed with significant losses.
It is estimated that almost $2 trillion in stock market value was lost worldwide in the space of two days.
Within the US, business organisations and consumer associations are reacting strongly. Major employers warn that these tariffs will result in higher prices for American consumers and burden U.S. companies based on imported raw materials
. In conclusion, the history of tariffs reflects a dipole of opportunities and risks. From ancient city-states that saw them as a life-saving source of revenue, to empires that used them as a weapon of war and modern governments that use them as a diplomatic weapon, tariffs have been a key policy tool.
However, their excessive or reckless use has also been linked to economic downturns and tensions. Today, as the world faces a new tariff storm, it remains to be seen whether the lessons of the past will be confirmed: that trade wars are easy to start but disastrous to win, and that in an interdependent world, high tariffs can ultimately hurt everyone involved.
*Advocates-Legal Consultants
