What did the Founding Fathers think of tariffs?
And should we listen to them today?
Benjamin Franklin, one of the Founding Fathers of America, and broadly considered a polymath, suggested that it was good for a nascent America to be dependent upon itself for its prosperity.
But what would he think of Donald Trump's protectionism? The ‘tariff tsunami’ that was recently unleashed on the world has severely disrupted the global economy, but would that matter to the Founding Fathers? And should their opinions matter to us today?
Recently, I've read two very interesting and opposing articles on this. First, from Chronicles, which notes that "from the nation’s founding until the Civil War, tariffs generated 90 percent of federal revenue." The article, published this year, argues that the Founding Fathers’ vision of a much, much smaller government would allow Trump’s vision of replacing income tax with tariffs may actually work:
If government were reduced to the size intended by the Founding Fathers, tariffs could once again replace the income tax as the primary source of federal government revenue. This is a big “if” that would require the radical downsizing.
In comparison, Iain Murray of the Competitive Enterprise Institute argued in 2022 "that “it is true that America drifted into protectionism early, but it is not the case that the Founding Fathers would have approved.” This was because, Murray argues, the Fathers were reacting to the protectionism that accompanied imperialism in the 18th century:
These examples show that the Founders were fully aware of what protectionist laws do to businesses and industries that are not the recipients of legal favor [sic], and just why they included the complaint [about King George III] about trade in the Declaration.
So, what was the Founding Fathers' opinions on tariffs? And - perhaps more importantly - should we listen to them today?
Beginning with George Washington - the first President.
For Washington, the immediate challenge of a new nation was a strong economy capable of sustaining it; but he did not consider himself to be an economist, and fairly reasonably so. He did argue for diversification based on necessity, which is why he encouraged (and personally pursued) a move away from tobacco as the primary crop, and embraced the cultivation of wheat.
This is why he appointed Alexander Hamilton as the first Secretary of the Treasury.
Washington signed, in 1789, the Tariff Act, which instituted a 5% tax on all imports - importantly, it was also the first major piece of legislation the new nation passed, after the ratification of the Constitution.
But this was a time when federal income taxes did not exist. That's hardly surprising - in Britain, the Income Tax was created in 1799 to fund the war against Napoleon, and was considered a temporary war-time measure.
Consequently, Hamilton would go on to play a greater role in shaping American protectionism than Washington would.
Hamilton, who never became President, produced a report in 1791 for Congress to argue that America's "infant industries" would need protection from "foreign competition". He argued that once a "domestic manufacture has attained to perfection... it invariably becomes cheaper."
In contrast to Hamilton, famously, was Thomas Jefferson, third President. While Hamilton wanted exports of "raw materials" to be banned and funnelled towards domestic industries, Jefferson initially argued for free trade. But Jefferson’s perspective, along with fellow Founding Father and fourth President James Madison, was intended to be a holistic approach to political economy; as Michael Sandel writes in Democracy’s Discontent (pp. 139-140):
Jefferson and Madison sought, through the sixteen years of their presidencies, to secure the conditions for a republican political economy - westward expansion and free trade. The Louisiana Purchase of 1803 achieved the first; the Embargo of 1807-1809 attempted, unsuccessfully, to achieve the second… [Jefferson] hoped through “peaceable coercion” to force the European powers to allow free trade for American commerce.
The Embargo that Sandel mentions here is, interestingly, not so far from Trump’s strategy. In 1807, Britain, utilising its enormous navy power, attempted to strangle Napoleon’s Europe by preventing all unilateral trade between the United States and the Continent, by forcing American products to pass through England first. In response, President Jefferson imposed a counter-embargo of foreign imports (read: British products) in an attempt to force Britain to drop its embargo. It failed, ultimately, because the British economy was both global and advanced, poised to erupt into the Industrial Revolution.
Jefferson and Madison were not all that interested in global peace, but securing the conditions, as Sandel says, for a republican political economy that would encourage prosperity and - importantly - self-reliance.
Jefferson, and his successor, went on to abandon free trade. This is due to a shift in the Jeffersonian political economic base away from “an agrarian economy linked to foreign commerce” in favour of “the development of domestic manufactures and a home market” (Sandel, p. 149). Importantly, in an 1816 letter Benjamin Austin (a well-known merchant and political writer prior to the Revolution, and later appointed by Jefferson as Commissioner of Loans for Massachusetts), Jefferson warned that free trade may undermine domestic manufacturing and “he therefore who is now against domestic manufacture must be for reducing us either to dependance [sic] on that foreign nation”1. He also warned that free trade absolutism can be used “as a stalking horse to cover their disloyal propensities to keep us in eternal vassalage to a foreign & unfriendly people”.
It must be remembered that Jeffersonian political economy is a “means to an end” approach that asks what type of economy will best secure the conditions for sovereignty, independence, prosperity, and strength.
What of the other Founding Fathers, John Quincy Adams and the man with whom we began, Benjamin Franklin? Adams’ political economy is broadly characterised as protectionist, and he made in a letter in 1819 a remark that is reminiscent of complaints today around cheap products from Asia, especially China, undermining local manufacturing (‘predatory pricing’):
The British Merchants and Manufacturers, immediately after the Peace disgorged upon us all their Stores of Merchandise and Manufactures nont only without profit but at a Certain loss for a time—with the express purpose of Annihilating all our Manufacturer’s, and ruining all our Manufactories.
As Jefferson learned with his embargo, the advanced manufacturing base in England (and the British empire at large) could simply outcompete the American industries. Both Jefferson and Adams were won over to the Hamiltonian cause of protecting American industries through protectionism, and Adams, the more fervent of the two, believed that America’s future “would be marked by industrial annihilation, economic ruin, consumer extravagance, and debt”, as John Burtka IV wrote for American Compass.
As for Benjamin Franklin, the quote at the top of this post - about being “thrown upon our own resources” - should not be mistaken for an economic observation, but rather a personal one. He is making the quite simple observation that being forced to rely on yourself is the best route to self-improvement, something he extended to industry and politics. He is not rejecting free trade, but rather (as Adams argued, but with a different outcome) that no country’s economic base should become so intertwined with, and dependent on, another country’s, because then national independence and political sovereignty would be undermined.
Instead, the more direct quote from Franklin, from 1774, should be borne in mind:
No nation was ever ruined by trade, even seemingly the most disadvantageous.
But Franklin believed free trade should be an international strategy paired with a domestic strategy that encouraged the growth of manufacturing in order for exports to exceed imports. An industrial strategy would be needed - which, in Franklin’s days, meant more often an agricultural policy drawn from the physiocratic school of thought developed in France, that land ownership is the foundation of wealth.
We can say, therefore, that there was not a unified vision amongst the Founding Fathers in terms of economic policy. In fact, this led to serious disagreements and debates in the early 19th century over how the United States ought to organise its economy and how it could do so - the focus of Sandel’s excellent book.
Should we - can we - learn from this today?
Principles of political economy are - as the name suggest - not just questions of ‘making GDP go up’, but also include considerations of politics, and so the subject should factor in economic principles as well as political principles. That’s why the question of tariffs get so murky in the realm of political economy, because the means-end justification of making economics work for politics is inherently divided by what political actors think the role of politics is. Is it social justice? Prosperity? Redistribution? The purpose of politics determines the purpose of economics and the shape it should take.
For example, as Ryan McMaken at the Mises Institute writes:
With protection must come taxation and enforcement. Thus, the protectionists tacitly or explicitly approve of fines and prison terms against their own fellow Americans who might be so bold as to disobey the authorities in the tradition of the American revolutionaries. And, of course, protection means higher taxes for everyone.
But let’s just consider the differences between 1776 and 2025, especially in terms of population numbers, and economic base.
In 1776, the population of the United States was estimated to be 2.5m, across just over 1.25 million square miles; today, there are 340m people living in the US, across 3.8m square miles.2
Moreover, the world economy has become that which Franklin did not envisage or desire: industrial, and deeply agriculturally intertwined. For Forbes, Frank Holmes has illustrated that (in these areas especially) 70% of the United States’ crude oil imports come from Mexico and Canada, while 60% of the US’s fresh vegetables come from Mexico.
If the economy, the country, and the world is so different from 1775, then is it all that helpful or relevant to reflect on what the Founding Fathers think? In one respect, the question is inescapable; the United States polity is so bound up with the founding myths of the Revolution, the Constitution, the Philadelphia Convention and the thought of the Fathers, that their thoughts bear heavily on American politics today.
Nevertheless, the political economic thought of the Founding Fathers was diverse, diffuse and different between them, ranging from total free traders, to practical necessities, to principled protectionists. Drawing on different elements of their thought should be done cautiously, and with an eye to the context in which they themselves were operating.
Where I believe we should learn from the Founding Fathers, is in what they thought the economy ought to do: secure the conditions for national independence and political sovereignty. When Britain embraced free trading in the 1830s and 1840s, it did so with the abolition of price controls on certain goods and products necessary for the good of its people, it still ensured there was a large and powerful merchant navy capable of ensuring the steady supply of overseas trade supplementing the (now inevitable) lack of self-sufficiency in food and raw materials.
This is the key lesson of the Founding Fathers: tariffs, and free trade, are not principles to be adhered to for their own sake or as ends in themselves. Rather, they are and must always be means to the end of national sovereignty.
Jefferson had no particular nation in mind - he was using a common turn of phrase (“this or that”).
Fascinatingly, that means that in 250 years, the population density (people per square mile) has grown from 2 to 89.