We use cookies that are necessary to make our site work as well as analytics cookie and third-party cookies to monitor our traffic and to personalise content and ads.
Please click “Cookies Settings” for details on how to withdraw your consent and how to block cookies. For more detailed information about the cookies we use and of who we work this see our cookies notice
Necessary cookies:
Necessary cookies help make a website usable by enabling basic functions like page navigation and access to secure areas of the website and cannot be switched off in our systems. You can set your browser to block or alert you about these cookies, but some parts of the site will then not work. The website cannot function properly without these cookies.
Optional cookies:
Statistic cookies help website owners to understand how visitors interact with websites by collecting and reporting information
Marketing cookies are used to track visitors across websites. The intention is to display ads that are relevant and engaging for the individual user and thereby more valuable for publishers and third party advertisers. We work with third parties and make use of third party cookies to make advertising messaging more relevant to you both on and off this website.
100 years of customs duties: the eventful history of US trade
key takeaways.
US economic history is punctuated by protectionist cycles, from the 1930 Smoot–Hawley Tariff Act to the 2025 tariff shock, used as a tool of national defence, often at the cost of disrupted trade
Free trade, embodied by the GATT in 1947 and the WTO in 1995, long prevailed, but the 1990s’ “golden age” of globalisation has given way to a defensive, competitive protectionism
Under Donald Trump, tariff escalation reached an intensity not seen since the interwar years, marking a break in international trade relations and weakening multilateralism
For open economies like Switzerland, reliant on key trading partners, the task is to diversify export markets and lean on innovation and agility to safeguard prosperity.
Over the last six months, Donald Trump’s trade strategy has come to resemble a global soap opera. Each tariff announcement triggers a chain reaction, shakes the markets and feeds economic uncertainty.
In order to understand what is at play today, this turmoil must be placed in a long-term perspective. This is not, in fact, the first time the United States has practised protectionism: its economic history has been marked by cycles where customs barriers have been lowered only to stage powerful comebacks in the name of defending the national interest.
But at no point since the interwar period has this return to protectionism taken as spectacular and systematic a form as that announced in Spring 2025.
Sign up for our newsletter
On 2 April 2025, dubbed “Liberation Day”, Donald Trump celebrated “one of the most important days in American history”, announcing a baseline tariff of 10% on all imports, and tariffs of 34% for China, 20% for the EU and 31% for Switzerland. Some sectors were hit harder than others; for instance automobile imports, taxed at 25%.
At no point since the interwar period has this return to protectionism taken as spectacular and systematic a form as that announced in Spring 2025
Markets plummeted, oil prices dropped, the US dollar and American debt were left to languish. Beijing retaliated with tariffs of 84%, triggering an escalation. After a wild week, Trump reduced tariffs temporarily on dozens of countries (to 10% for 90 days), opening up a phase of bilateral negotiations. At the same time, he increased the pressure on China, with tariffs of up to 125%, before accepting a truce and a temporary return to 10%. This moment of calm came to an end with a new shock: Switzerland was hit with an incomprehensible rate of 39%, imposed on 1 August, the country’s National Day.
These events marked a rupture in international trade relations, attacking the free trade system introduced in 1947 when the General Agreement on Tariffs and Trade (GATT) was signed. Is this the dawning of a new age or a return to Made in USA protectionism? For a clearer picture, we explore a century of tariff barriers.
America has long been tempted by the siren call of protectionism. At the turn of the 1930s, the Great Depression landed a heavy blow on the United States, which desperately sought to protect its economy. The Republican senator Reed Smoot and Republican representative Willis C. Hawley drafted the Smoot-Hawley Tariff Act, which was signed in 1930 by President Herbert Hoover, to shield American industry and agriculture from the crisis. As a result of the Act, tariffs on more than 20,000 products soared, leading to retaliatory measures by numerous countries, among them Canada, Mexico, France and even Switzerland.
This escalation caused a crisis during the interwar period, leading to a slump in world trade of around 66% between 1929 and 19341. In response, the Roosevelt administration voted in 1934 for the Reciprocal Trade Agreements Act, as part of its efforts to pull America from the nationalist trap by negotiating more flexible bilateral agreements2.
Far from providing a lasting solution, the episode aggravated the global economic crisis, and left a lasting trace on the collective American memory. Today, it serves as a warning whenever the subject of protectionism is raised in the United States.
From the GATT to the WTO: Geneva, the free trade capital
In 1947, in a world still in ruins after the Second World War, the global economic elite joined together to prevent a return to protectionism. The creation of the GATT in Geneva brought together some twenty signatory states committed to reducing tariffs on thousands of products.
Originally conceived as a provisional agreement, the plan was for GATT to be replaced by a true international trade organisation. However, political disagreements between the principal players blocked the project, leaving GATT as the operative trade negotiation framework for almost fifty years until the creation of the World Trade Organization (WTO) in 1995.
In 1947, the average global customs tariff exceeded 20%, while in 1994 it fell to below 4% in developed countries
Several rounds of negotiation3 led to a gradual fall in tariffs, in particular with the Dillon Round (1960–1962) formalising a reduction of USD 4.9 billion in tariffs, the Kennedy Round (1964–1967) which led to an average tariff reduction of 35% and the Tokyo Round (1973–1979) which began to address non-tariff barriers. The Uruguay Round (1986–1994), the last and most important, led to the creation of the WTO in 19954. These agreements radically transformed world trade. In 1947, the average global customs tariff exceeded 20%, while in 1994 it fell to below 4% in developed countries5.
America in the noughties, or the end of Happy Globalisation
During the second half of the 20th century, US support for free trade reflected both its economic dominance over a Europe recovering from War, and its desire to integrate Western economies against the threat of communism.
Since the 1990s, now seen as the golden age of ‘Happy Globalisation’ and free trade, the United States has initiated a slow but deep destabilisation of this model, notably following the signing of the North American Free Trade Agreement (NAFTA), the rise of Chinese imports and the financial crisis of 2008. This led to what some have called ‘competitive liberalisation’6, with growing awareness of the harmful effects of globalisation on certain segments of the US economy due to offshoring, destabilisation of manufacturing industries and an increase in trade deficits7.
Under the Clinton, Bush and Obama presidencies, this manifested as an increased recourse to defensive trade instruments, notably in 2002 with the Bush administration’s imposition of tariffs of 8%–30% on imported steel in order to “save” the US steel industry. (These taxes lasted just 21 months, instead of the 3 years initially envisaged, with the WTO judging them illegal and the economic results proving disappointing8.)
Donald Trump adopted a resolutely protectionist trade policy in 2016, which he justified by the desire to reduce the US trade deficit and protect the industries deemed to be strategic
It was in this context that Donald Trump adopted a resolutely protectionist trade policy in 2016, which he justified by the desire to reduce the US trade deficit and protect the industries deemed to be strategic. Citing the Trade Expansion Act of 1962, his administration levied tariffs of 25% on steel and 10% on aluminium imports, imposing them on allies (European Union, Canada, Mexico) and rivals alike9.
At the same time, based on the Trade Act of 1974, Washington engaged in a trade war with China, gradually imposing tariffs on more than USD 360 billion of Chinese goods, justified by claims of unfair trade practices and intellectual property theft10. Immediate retaliatory measures affected US agricultural exports in particular.
While Trump presented his strategy as a way to repatriate production and boost industrial employment, it also caused diplomatic tension, a rise in costs for numerous American businesses and growing uncertainty in international markets.
Though the Joe Biden administration did not move away significantly from the protectionism introduced by Donald Trump, Biden did put an end to the conflict surrounding steel and aluminium, signing an agreement with the European Union in 2021 that replaced the tariffs with import quotas. Throughout his time in office, Biden’s approach was marked by ‘cooperative protectionism’, geared toward defending strategic sectors, relocating production, and creating trade alliances to secure supply chains.
Biden adopted cooperative protectionism, geared toward defending strategic sectors, relocating production and creating trade alliances to secure supply chains
Where does Switzerland stand?
Modern Switzerland has built its prosperity on a strategy of openness and free trade, focussing on innovation, specialisation in key industries and the quality of its workforce. With the Swiss economy – one of the world’s most competitive – driven most notably by the pharmaceuticals industry, watchmaking, precision machinery and finance, Switzerland benefits from multilateralism and a network of free trade agreements with 70 trading partners across the European Free Trade Association, and through numerous bilateral agreements.
In addition, the Alpine Republic is characterised by agility and an ability to adapt, which allow it to respond swiftly to international economic developments and to reposition its businesses when faced with fresh challenges.
There is another side to the story, however. This openness to the outside world makes Switzerland heavily dependent on its principal export markets – the United States, the European Union and China. With limited political weight and market size, Switzerland also has little room for manoeuvre when the world’s great powers take unilateral decisions. This was cruelly demonstrated by recent events, when the failure of negotiations between the Federal Council and the US administration led to customs tariffs of 39% imposed on a wide range of products, causing difficulty for several key sectors and highlighting Switzerland’s lack of coercive leverage.
For exporting nations such as Switzerland, the challenge now is to adapt their model by diversifying their markets, consolidating their alliances and focussing on their innovative capabilities and the agility of their economy
American protectionism runs like a thread through the country’s history, disappearing then resurfacing during periods of doubt or economic fragility. From the Smoot-Hawley Act of 1930 to the trade war launched against China in 2018 and the tariff shock of 2025, the United States has regularly turned to customs tariffs as a means to defend its strategic interests.
The efficacy of these policies remains contested, however. Far from granting lasting protection to employment or industry they have often exacerbated tensions, slowed trade and made international cooperation more fragile. The current cycle marks a fresh rupture, accelerating deglobalisation and hastening the dawn of an era of fragmented trade where blocs and power relations take precedence over common rules.
For exporting nations such as Switzerland, the challenge now is to adapt their model by diversifying their markets, consolidating their alliances and focussing on their innovative capabilities and the agility of their economy. Through these efforts, they will be able to safeguard their prosperity and make their weight felt in a world where protectionism, rather than being an exception, is a recurring feature of US history.
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
share.