Problematic Protection

Remembering another time and place that changed its mind—and global position

The following piece is one in a series of letters to my prospective granddaughter.

March 13, 2025

Dear Baby,

I have no idea how interested you will be in economics. The odds are not likely you will be, though you have a father who majored in the subject (at the University of Chicago, with a history of leadership in the field, and where I happen to be staying when I complete this post). Perhaps you’ll have a layman’s interest as a well-informed citizen; I hope you do. In any case, economic considerations, large and small, will likely play a major role in your life, if not necessarily a decisive one.

I have something of a sporting interest in economics, mostly as an index of the state of affairs in the republic, which is in more turmoil than they have been in the last few years. In part, that’s because our newly re-elected president has slapped a bunch of tariffs on other nations—including some of our closest allies. Putting aside the wisdom of this policy (I, like most of the people around me, am deeply skeptical, mostly in the matter of their sudden execution rather than a wholesale dismissal of the idea), my mind of late has been wandering to another example of an empire that tried something similar.

That example is of Great Britain, about ninety years before you were born. This tiny island nation at the far corner of the North Atlantic once controlled one-quarter of the real estate on the planet, and did so not with soldiers—its army was usually small compared with its competitors—but with trade (and, admittedly, a powerful navy). Like many of its predecessors and competitors, Britain built an empire by acquiring control of territories and turning them into markets they controlled and closed to outsiders. Its colonies, in particular its thirteen mainland North American colonies, were governed under an economic system known as mercantilism, under which they existed to promote the power and economy of the mother country (which was usually a matter of supplying commodities that could be turned into finished goods—New England, for example, furnished the lumber, and Old England built the ships). That worked well for a couple of hundred years.

But then something happened that changed the rules of the game: the Industrial Revolution. Britain was the first nation to experience it, which gave England a running start on a new world order. This fact, along with some internal political considerations we won’t get into here, transformed the British empire from a mercantilist to a liberal, or free trade, one. Once upon a time, the empire was a walled economic garden. Under the new common sense, though, its leaders said to the world: let’s buy and sell to everybody. You’ve got stuff we want (again, usually commodities) and we’ve got stuff we can manufacture better and cheaper than you can. You might want to manufacture goods for your own markets, but you can’t, at least not in the short run and without considerable expense. So be realistic for all our sakes. (And by the way, we’ll lend you lots of money to do lots of things if you play ball our way.)

And so it was that Great Britain was truly great in its power and influence. But no empire lasts forever, and over time, British economic supremacy began to ebb. One of its competitors, of course, was the former possession now known as the United States. For a long time, its leaders fostered its economic power by allowing it to develop its industrial capacity from within, and one powerful tool for doing that was taxes on foreign goods known as tariffs. Tariffs promoted domestic manufacturing by making foreign (and sometimes admittedly better) goods more expensive. Tariffs could be controversial—many people cared more about the day-to-day cost of living than abstract economic supremacy—but the nation’s political leaders (most of them members of the new Republican Party of the mid-nineteenth century) championed tariffs. But wouldn’t you know, the United States—in particular those formerly protectionist Republicans—increasingly became champions of free trade in the early decades of the last century.

Britain, meanwhile, was having second thoughts. Growing economic competition from rising powers (notably Germany), a catastrophic world war, and the onset of the Great Depression put a huge dent in Britain’s global power. Many nations were also struggling during the Great Depression. But Britain had an option few others did: it could re-create its walled colonial garden. It was called “Imperial Preference,” and promoted trade among and between a network that included Canada, India, and Australia. Other countries imposed tariffs, too, including the United States. The general consensus among economists is that it only made matters worse. I believe that, but I also believe that economists revise their views over time. As I often say, History is the story of how common sense changes. In any case, all these protectionist walls soon became beside the point with the coming of the Second World War. In its aftermath, the United States became an empire of free trade, and re-ordered the world along these lines with great, if never complete, success for the rest of the twentieth century.

But now the United States of the 2020s is beginning to resemble the Great Britain of the 1930s. To me the success or failure of tariff policy is less important than the loss of power and confidence that drives it. If one assumes, to use the language of our current president, that our allies have been “ripping us off,” it’s a “violation” we could once afford. A lack of willingness to do so is less a matter of getting wise than losing strength.

I could be philosophical about this as a scholar and say that such are the ways of the world. I could be dispassionate about this as an old man who has had a prosperous life and who has reason to hope that my children will have sufficient nimbleness to go about theirs for another generation. It’s you, sweetheart, who worries me. The fate of an individual is not the same as the fate of an empire, and at this point I find myself hoping that geopolitical interests and considerations will not be a big part of your life. I’m less interested in wanting you to care than knowing that you had a grandfather who once did, and that this knowledge can help you measure what you should value and what you should not. My living hopes rest on your future wisdom.