Donald Trump has been long fixated on the idea that tariffs could solve the country’s budgetary problems.
The concept has a lengthy history. Until 1913 saw the introduction of the 16th Amendment granting Congress the power to levy income taxes, tariffs were the sole source of revenue for the federal government.
As Trump prepared to retake office, he began floating the idea of starting an “external revenue service” to handle tariff collection, seemingly ignorant of the fact that the U.S. Customs Service — now a division of U.S. Customs and Border Protection — has been responsible for collecting tariffs since Alexander Hamilton served as treasury secretary during George Washington’s presidency.
But Trump’s tariff obsession isn’t new. During his first term, he made more frequent use of his power to unilaterally impose more import taxes than any previous modern president.
And the idea has actually been a constant for his entire time in public life, dating back to his emergence as a real estate tycoon in the 1980s and 1990s.
Trump grew up in the prosperous period that started with the end of the Second World War and continued unabated until the shocks of the oil crisis that drove up prices in the late 1970s and helped lead to Ronald Reagan’s election over Jimmy Carter in 1980.
That period also saw the rise of Japan as a global business powerhouse that many at the time feared would overtake the U.S. as the world’s strongest economy.
As Trump’s profile grew and he began to toy with the idea of running for high office., he started talking about global trade — and those talking points have barely changed.
In one 1987 interview with CNN’s Larry King, he railed against Tokyo’s trade policies.
“The fact is, you don’t have free trade. We think of it as free trade, but you right now don’t have free trade,” he said, adding later that “a lot of people” were “tired of watching the other countries ripping off the United States.”
Japan is no longer the powerhouse it once was, but Trump still believes the United States is somehow getting “ripped off,” even though the trade deficits he often rails against are the result of global changes in manufacturing and supply chain expediencies rather than deliberate subterfuge by shadowy global elites.
And because of decades of decisions by Congress to delegate more and more trade authorities to the executive branch, America’s legislature no longer has nearly as much of a say in what taxes Americans pay on imported goods.
Days into his second term, Trump upended American markets by threatening to impose 25 percent tariffs on all imported goods from America’s two closest neighbors, Mexico and Canada.
As is his habit, he broke the news over a weekend and on his bespoke social media site, Truth Social — and by Monday morning, the markets reacted with a rapid sell-off as soon as they opened.
