Tariffs, power and the myths of free trade
The word “tariff” is a reminder that the global economy was never about goods alone — it was always about the flow of power. “Tariff” comes to us through the Arabic taʿrīf, meaning “to make known” — a declaration of terms, an act of setting boundaries. But in the world forged by colonial conquest and industrial capitalism, tariffs became far more than notifications. They became weapons.
A tariff, at its simplest, is a tax on goods crossing a border. Yet its simplicity masks a long and often violent history. Tariffs have been used to nurture industries and to destroy them, to build empires and to strip colonies bare. They have shaped the global economy in ways that remain with us today.
Before Britain became the champion of free trade, it was a staunch protectionist. For nearly two centuries it relied on measures like the Navigation Acts, prohibitive tariffs, and what is now politely termed industrial espionage, to protect and grow its manufacturing base.
It was only in the 1840s — once Britain had already achieved global industrial dominance — that it embraced free trade. The repeal of the Corn Laws in 1846, often celebrated as a triumph of free-market ideals, came only after Britain had secured its industrial dominance. As the great historian Eric Hobsbawm notes, Britain’s turn to free trade was not a principled commitment to liberalism but a strategic shift — having used protection to rise, it now sought open markets for its goods abroad.
The US has followed a similar trajectory. In the 19th century, it maintained average tariff rates of between 40% and 50% on manufactured goods — among the highest in the world. Like Britain, the US used tariffs to protect its “infant industries”, shielding domestic producers from foreign competition while building the foundations of its industrial strength.
Once these powers were in control of the global economy, however, they denied others the right to follow the same path. What the 19th-century German economist Friedrich List called “kicking away the ladder” became a defining feature of imperial economic policy. Protectionism was for the strong. The rest were told to compete on open terms — even if they had no chance.
The story of Bengal offers one of the clearest examples of how tariffs and trade policy were used as weapons of economic conquest. In the early 18th century, Bengal was the world’s leading producer of cotton textiles. According to the historian Prasannan Parthasarathi, wages for skilled Bengali textile workers were among the highest in the world, and its muslins and cottons were traded as luxury goods across Asia, the Middle East and Europe.
But Britain, seeking to protect its own industries, imposed punishing tariffs on Indian textiles — in some cases as high as 80%. The Calico Acts of 1700 and 1721 banned or heavily taxed the importation of Indian textiles into Britain. After the British East India Company gained military and political control over Bengal following the Battle of Plassey in 1757, the assault intensified. British goods were exported into India tariff-free, while Indian producers were burdened with taxes and restrictions.
The results were catastrophic. Between 1750 and 1810, India’s share of the global textile trade collapsed from around 25% to under 5%. British textile mills — powered by colonial cotton, enslaved labour and protected by tariffs — rose as Bengal’s artisans were plunged into poverty. Though some colonial apologists have dismissed the more lurid stories of weavers’ thumbs being cut off, the broader truth is undeniable — through tariffs, trade restrictions and military domination, a thriving industrial economy was dismantled to clear space for British industrialisation.
Across the world, similar patterns have repeated. Western powers often enforced unequal trade through “gunboat diplomacy”. Haiti, the world’s first black republic, was blockaded by European and American warships after its revolution in 1804 — eventually forced to pay an enormous “independence tariff”.
In 1853, Commodore Matthew Perry’s “Black Ships” forced Japan to open its markets. After British naval bombardments during the Opium Wars of the 19th century, China was compelled to accept the opium trade and sign “unequal treaties” that ceded key ports and legal powers to European powers, independence indemnity debt” to France and accept punishing trade terms that would cripple its economy for generations.
As formal empires gave way to subtler forms of dominance after World War II, military coercion was replaced by economic leverage. The post-war Bretton Woods institutions — particularly the International Monetary Fund and World Bank — assumed the role once played by imperial gunboats. Aid and loans were tied to “reforms” that opened markets, privatised public assets and subordinated national planning to global capital.
In the 1980s, structural adjustment programmes swept through the Global South. African countries that had used tariffs as part of broader efforts to foster national industries were forced to liberalise trade in exchange for desperately needed loans. The consequences were devastating. Local industries collapsed, state capacity weakened and poverty deepened.
The Washington Consensus — that mix of liberalisation, deregulation and fiscal austerity — was promoted as a path to prosperity. In reality, it locked countries into dependency.
South Africa was no exception. Following the end of apartheid, the country committed to sweeping trade liberalisation. In 1994, South Africa signed on to the General Agreement on Tariffs Trade framework and later joined the World Trade Organisation. Between 1996 and 2004, tariffs on clothing were cut from nearly 90% to about 40%; footwear tariffs fell from 60% to 30%.
These reductions coincided with China’s entry into the World Trade Organisation in 2001, triggering a surge of cheap imports. In places like Durban and Cape Town, where whole communities depended on clothing factories, the effects were brutal. By some estimates, more than 75 000 jobs were lost in the clothing sector between 2002 and 2006.
At the same time, the US continued to protect its own industries. Generous cotton subsidies helped American farmers undercut producers across West Africa, depressing prices and squeezing rural livelihoods. The global rules were never neutral — they reflected the interests of the powerful.
Tariffs reappeared on the global stage during Donald Trump’s first presidency. Between 2018 and 2020, his administration imposed tariffs on more than $350 billion worth of Chinese goods and targeted multiple allies with new duties. But this new tariff regime was driven less by strategic industrial planning and more by political theatre.
While tariffs once protected rising industries, today’s context is vastly different. According to the US Census Bureau, manufacturing now makes up just 11% of the US economy — down from 28% in 1953. Only about 8% of US workers are employed in manufacturing, compared to 30% in the 1950s.
A 2021 study found that Trump’s tariffs had raised costs for consumers and businesses but did not result in a measurable increase in domestic manufacturing jobs. Most firms simply shifted supply chains to low-cost countries. The attempt to use tariffs to reverse decades of deindustrialisation ran into a hard truth — once factories close, skills atrophy and supply chains fragment. Reviving an industrial base requires more than border taxes, it demands sustained investment, strategic planning and a political economy geared towards production over speculation.
The history of tariffs is not a morality tale of free trade versus protectionism. It is a story of power; of who could build behind walls, who was denied that right and who still bears the scars. From the abandoned looms of Bengal to the closed clothing factories of Cape Town and the hollowed-out steel towns of the American Midwest, tariffs mark a deeper story — one in which the rules of trade have been written and rewritten by the strong at the expense of the weak.
In today’s fractured global economy, where economic nationalism is resurging, the old lessons remain. Tariffs can nurture local industries or deepen inequality — the outcome depends less on ideology than on power, context and intent.
Vashna Jagarnath is a historian; political risk and diversity, equity and inclusion consultant; labour expert; pan-African and South Asian political analyst and curriculum specialist.