Equality, Reciprocity, and Punishment in 19th-Century Trade Wars

Trade wars are frequently characterised as explicit, ruthless bids for economic power and political influence. As in actual wars, however, participants in trade wars frequently style opposing parties as aggressors, and their own actions as merely defensive. How are these claims of unfair treatment made? How and why did tariffs emerge as a primary - and apparently enduring - technique for achieving redress?

This paper addresses these questions by examining how the concept of a ‘retaliatory’ tariff was articulated in legal theory and political argument between the 1870s and the 1890s. Following the global economic crisis of 1873, the Swiss confederation and the German empire adopted tariffs that contained provisions allowing for automatic ‘retaliation’ against other states that were held to discriminate against their goods and shipping. Parallel provisions were added under the US ‘McKinley’ tariff of 1890, and extensively revised and reworked thereafter.

The paper shows how the question of tariff retaliation highlighted emerging tensions between European and US-American understandings of the fundamental principles of nineteenth-century international economic law. In the 1860s and 1870s, many European states had used commercial treaties to reform their national tariffs so as to tax the same commodities equally, irrespective of their country of origin. The rise of ‘retaliatory’ tariffs from the 1870s threatened to upend this careful equilibrium, at the same time as an aggressive US policy of ‘reciprocity’ sought to use tariff discrimination to selectively open Caribbean, central and south American markets to US exporters - and drive out European competitors. When they were arguing about tariff retaliation, European and American diplomats, traders and politicians were actually litigating the fundamentals of the hierarchical and exploitative political economy of the nineteenth-century world, and the extent to which it could integrate the emerging power of the United States.