Donald Trump’s repeated references to the U.S. tariff policy of 1870 to 1913 as a model for today’s
government financing reveal a historically incoherent and economically naïve worldview that disregards both radically changed fiscal realities and the social costs of that earlier system. His
claim that tariffs could replace the income tax fails at the most basic empirical level:
Between 1870 and 1913, tariffs accounted for an average of 38–50% of federal revenue, at a time when
government spending was only 2–3% of GDP. In 2024, U.S. federal revenues total $4.9 trillion, of which tariffs account for just $77 billion (1.6%). To replace the income tax ($2.4 trillion) with
tariffs, the U.S. would have to levy an average tariff of **80%** on all imports ($3.3 trillion)—a historically unprecedented figure that would immediately trigger trade wars. Even Trump’s own
estimates of $2–3 billion per day in tariff revenue are wildly exaggerated: actual data show only $180–263 million per day, which would amount to a maximum of $96 billion annually—less than 4% of
what would be needed.
Trump’s romanticization of this era as a “golden age” ignores its brutal social realities: while per
capita GDP did rise, 40% of Americans lived in poverty in 1900, child labor was rampant, and inequality reached record levels (Gini coefficient 0.55–0.60). The minimal government share of GDP
(2–3%) was only possible because the federal government provided no social benefits, healthcare, or old-age security—a model that would be politically and morally unacceptable in any modern
welfare state. Moreover, the economic growth of that era was primarily driven by resource exploitation, unregulated monopolies, and massive immigration of cheap labor, not by
tariffs.
Tariffs are highly regressive: studies show that the bottom 50% of income earners in 2024 would lose
3–5% of their income due to Trump’s tariffs, while the top 10% would lose only 0.5%. In contrast, the income tax is structured to be progressive—the richest 1% pay 42% of the tax burden. A
tariff-based system would massively shift the tax burden from the wealthy to low- and middle-income Americans. Economists at the Wharton School project that Trump’s tariff plans would reduce GDP by 6% in the long run and cut
wages by 5%. Prices for imported goods would rise by 10–15%, and if the income tax were abolished at the same time, the net loss of purchasing power for a typical middle-class household could
reach $22,000 per year. Furthermore, an 80% tariff on all imports would collapse global supply chains—60% of U.S. imports are intermediate goods for industry.
Even in the 19th century, tariffs failed as a source of crisis financing: during the Civil War
(1861–1865), tariffs covered only 15% of war costs; the Union had to introduce its first income tax and issue $2.2 billion in bonds. The Great Depression of 1929 occurred despite high tariffs—the
Smoot-Hawley Tariff of 1930 only made things worse. Trump’s claim that the income tax was
introduced in 1913 for “reasons unknown to mankind” is historically absurd. The 16th Amendment was a direct response to the fiscal inadequacy of the tariff system: between 1865 and 1913, federal
spending rose by 400% while tariff revenue stagnated. Industrialization required investments in infrastructure and education—needs that tariff revenues could not meet.
Trump’s nostalgia for the 19th-century tariff regime is an economic anachronism that fails to grasp
the complexity of modern economies and the social achievements of the 20th century. His proposal ignores the math (tariff base vs. tax needs), the history (tariffs’ failure in crises), and the
sociology (the impoverishment of the middle class). It is a populist pseudo-argument that masks the interests of economic elites—precisely the group that profited from unregulated monopolies and
cheap labor between 1870 and 1913.
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