03-04-2025
History shows low tariffs and stability lead to growth not the opposite
In an era where trade has become both a political battleground and an economic bellwether, the United States' evolving tariff policy reveals much about our shifting priorities − and what might lie ahead for the nation's economic future.
For the past 50 years, the U.S. economy has grown steadily under a relatively low tariff regime.
Beginning in 1975, average tariff rates hovered around 5.5%, but by the early 2000s, they had dropped to nearly 1.5%.
During that same period, Gross Domestic Product (GDP) ballooned from approximately $1.7 trillion to over $13 trillion. These figures tell a simple story: economic growth thrived alongside liberalized trade.
But things began to change in the late 2010s.
Trade tensions, particularly with China, drove a brief but sharp increase in average tariffs − peaking at nearly 14% in 2019. Although GDP growth persisted, volatility increased, and industries exposed to global markets braced for impact.
Fast forward to 2024, and the policy landscape has shifted once again.
The U.S. is now proposing and implementing tariffs as high as 25% on targeted imports.
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Advocates of this strategy argue that "reciprocal tariffs" − those matching the duties imposed by foreign governments − level the playing field and protect American industries.
However, critics warn of inflationary pressures, trade retaliation, and potential damage to U.S. competitiveness.
What does history suggest?
The data reveals that America's most sustained periods of GDP growth occurred under low and stable tariff conditions.
While targeted tariffs may offer short-term protection, a broader retreat from trade openness could risk long-term economic vitality.
As policymakers navigate this new phase, they must weigh the protective appeal of tariffs against the proven benefits of openness.
Tariffs may be easy to impose − but reversing course is often far more difficult.
Soumen N. Ghosh, Ph.D., is a professor of economics at Tennessee State University.
This article originally appeared on Nashville Tennessean: Trump tariffs policy ignores economic history on GDP growth | Opinion
