There’s a lot of uncertainty over whether President Donald Trump will actually go through with all his planned tariffs, whether the economy will stall or go into reverse as a result, and whether Congress will eventually decide that it has had enough of ceding its tariff authority to the president. I thought it might be helpful to put those concerns aside for a moment, take White House trade adviser Peter Navarro at his word that Trump’s tariffs will raise $700 billion a year ($100 billion from auto tariffs, $600 billion from everything else) and examine what that kind of tariff revenue looks like in the great sweep of American economic history.
First of all, it looks like a lot. $700 billion is about nine times current US customs revenue, and 2.4% of the most recent estimate of US gross domestic product. Tariff revenue hasn’t surpassed 2% of GDP since the early 1870s, and hasn’t surpassed it on a sustained basis since the 1820s and 1830s. Trump often cites President William McKinley’s high tariffs as an inspiration, but during McKinley’s presidency (1897 to 1901) tariffs generated less than half the share of GDP that $700 billion would amount to now.
The customs statistics here are official and presumably reliable; the GDP numbers less so. US government GDP estimates start in 1929, and for earlier years I’ve used after-the-fact estimates collected at the excellent MeasuringWorth.com that decline in reliability the older they get. All of which is a long way of saying that no one should make too much of all those long-ago fluctuations, although there were in fact big jumps in imports following the War of 1812 and Civil War that drove up customs revenue temporarily.
After the post-War of 1812 boom, imports of goods fell to about 10% of estimated GDP. They stayed below 10% from 1837 until 1996. Last year, they were 11.2% of GDP.
The sharp increase in imports since the 1960s is what Trump is reacting to with his tariff policy. It also provides a much larger revenue base against which to levy tariffs, making the White House’s projections seem a bit less historically anomalous. The 21% of current goods imports that $700 billion would amount to is slightly lower than the tariff revenue percentage during the McKinley years and basically par for the course for the 19th century.
