Our new banana republic
Who knew we'd spend 2025 obsessing over tariffs?
I didn’t expect to spend 2025 obsessing over tariffs. I expect you didn’t either. The good news is that there’s an audience for what we’ve learned: tariffs are suddenly a hot topic on social media.
People are paying attention, particularly since more than $6 trillion in market wealth vanished after the White House tariffpalooza last week. Treasury Secretary Scott Bessent says Americans “don’t look at the day-to-day fluctuations” of the stock market. That’s ordinarily true — until the market crashes, and then everyone starts watching.
Thanks for being part of the Now It’s History community. It’s with readers in mind that I’ve had the pleasure of diving into past moments when trade rose to the top of the American agenda.
Now that President Donald Trump has imposed huge tariffs on imports to the U.S., some of my recent posts may help answer your questions and illuminate what’s happening now. I’ll share those links below.
But first: What is a tariff?
The dictionary definition is “a schedule of duties imposed by a government on imported or in some countries exported goods.”
According to www.etymonline.com, the word migrated to English from Italian, Latin and Arabic in the late 16th century:
1590s, "arithmetical table," also "official list or table of customs duties on goods for import or export;" also "a law regulating import duties," from Italian tariffa"tariff, price, assessment," Medieval Latin tarifa "list of prices, book of rates," ultimately from Arabic ta'rif "information, notification, a making known; inventory of fees to be paid," verbal noun from arafa "he made known, he taught." A word passed to English from the commercial jargon of the medieval Mediterranean…
It’s bananas
There are many peculiarities about Trump’s across-the-board tariff scheme. Watching White House adviser and tariff hardliner Peter Navarro on Fox News railing on about the evil of VAT taxes and promising the return of the Detroit auto industry of the 1950s doesn’t inspire confidence. Nor does his prediction that the market will soon bottom and the now-plunging Dow will hit 50,000 by the end of Trump’s term.
Here’s one of the weirder aspects of the Trump-Navarro plan: While it’s being justified on the ground of protecting American industries, the trade duties even apply to products that the U.S. can’t reasonably produce in sufficient quantities to meet the demand.
For reasons of climate and basic economics, there’s no way the U.S. can grow products like bananas, coffee and tea at real scale. So the tariff on those goods serves no rational purpose, except to raise some money for the U.S. Treasury. And who will pay for that extra tax? To a great degree, the American consumer, in higher grocery prices.
Americans eat a lot of bananas — about 26 pounds per person per year, on average — and nearly all of that fruit is imported. Banana imports to the U.S. exceed $2 billion, with the largest amounts coming from Guatemala, Costa Rica, Honduras, Mexico and Colombia, according to the U.S. International Trade Commission.
The fruit can be grown in tropical regions, in Hawaii and Florida for example, but land and labor costs in those states limit the size of the crop and increase the price. No economist would seriously advocate setting aside land in Southern Florida for vast banana farms.
Bananas are only one of many crops that can be produced more economically overseas. The U.S. imports more than half of the fruit Americans consume, and more than a third of the vegetables. We have become increasingly dependent on imports for the produce sold in U.S. supermarkets.
The tariff crises
Donald Trump was not the first American politician to think “tariff” is a beautiful word. In the 1820s, Henry Clay was the foremost proponent of trade barriers to protect U.S. industries and President John Quincy Adams went along for the ride. The result: The “tariff of abominations” in 1828.
A century later, President Herbert Hoover signed the punitive Hawley-Smoot tariff, over the objection of more than a thousand economists. World trade plummeted, intensifying the Depression.
The only positive outcome was a growing enthusiasm for the freer trade cause championed by Cordell Hull, who became Secretary of State under President Franklin D. Roosevelt. The president and Congress, recognizing the fiasco created by Hawley-Smoot, shifted power over tariffs from the legislative to the executive branch, and tariff barriers started coming down…until Trump was elected.
The tariff bible
If you want to learn more about the complex and turbulent history of tariffs in America, there’s one essential book: Clashing Over Commerce: A History of US Trade Policy, by Douglas A Irwin. In 693 pages, not including the notes, bibliography and index, the Dartmouth professor lucidly chronicles the ebbs and flows of tariff barriers and the economy.
In a new article for The Economist, Irwin assails Trump’s “bonkers” theory that trade with every country should be “balanced” and points out: “there is no consensus in Congress that such draconian steps are warranted; nor is there a general view among the American public that trade is a big problem. Mr Trump inherited an economy in decent shape … In other words, no one was asking for any of this.”
Irwin ends his book, published in 2017, with this thought about the future: “Perhaps the only thing that can be said with confidence is that, as James Madison predicted long ago, many new clashes are sure to arise over the future of US trade policy.”