What Hitler’s tariff policy misfire can teach the modern world
From Hitler’s economic isolation to Trump’s tariff battles, history has repeatedly shown how the economic tool has been used for political gain. But more often than not, tariffs lead to long-term economic pain instead of recovery
In early 1933, Adolf Hitler sat before his cabinet with one clear concern — not yet war or racial policy, but the looming Reichstag elections. "Unacceptable unrest," he warned, had to be avoided. And for that, he reached for a populist tool that many leaders have turned to in times of crisis: tariffs.
Within 48 hours of taking office as Chancellor of Germany, Hitler's ministers were already discussing import restrictions. "The agricultural sector's demands for higher tariffs must be met," declared Alfred Hugenberg, Hitler's economic minister.
The message was simple: Protect the German farmer from foreign competition and rally national economic pride. But what unfolded over the next few years was not a story of revival.
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Instead, it became a cautionary tale of economic insularity that echoed far beyond Germany's borders — and still reverberates today.
In the modern era, this was first seen with brutal clarity during the 1930s, when the United States passed the Smoot-Hawley Tariff Act. Intended to shield American farmers amidst the Great Depression, it instead worsened it.
By 1933, US exports had plummeted by 61%. Constant dollar GDP fell by 18.5% between 1930 and 1932. Farm output dropped from $10.3 billion to $5.5 billion.
President Franklin D Roosevelt moved swiftly to undo the damage through the Reciprocal Trade Agreements Act of 1934, which stated, "A full and permanent domestic recovery depends in part upon a revived and strengthened international trade."
Nineteen bilateral agreements followed in five years — an effort to stitch back together what the tariffs had torn apart. Yet it was a lesson Hitler ignored.
The ideological architect of Nazi economics, Gottfried Feder, argued that tariffs would "return the German economy to the Germans" and free workers from the grip of foreign labour.
Mr Trump has done a lot of damage to America and the world. The president was right in at least one of his Rose Garden statements. With tariffs, he said, 'we can be so much wealthier than any country, it's not even believable.' He got that last bit right.
"National Socialism opposes the liberal world economy, as well as the Marxist world economy," he wrote.
Feder's views resonated with Hitler's nationalist vision. "Within four years the German farmer must be saved from destitution," Hitler proclaimed in a national address. His answer was to protect domestic agriculture at all costs.
But warnings came swiftly. Eduard Hamm, former Economics Minister and trade expert, urged caution. Germany, he pointed out, relied heavily on exporting industrial goods — 5.5 billion reichsmarks worth annually.
Slashing imports of agricultural products, which averaged 1.5 billion reichsmarks, might please farmers but would alienate Germany's trade partners. "Exporting German goods provides three million workers with jobs," Hamm warned.
Foreign Minister Konstantin von Neurath, too, feared backlash, calculating that tariffs could drive up the price of imported eggs by 600%.
Nonetheless, Hitler pressed on. And soon, Germany found itself isolated. The early 1930s economic recovery stalled. With trade links eroded and domestic prices volatile, what began as economic nationalism helped lay the groundwork for rearmament and conflict.
From France's Méline Tariff in 1892, which raised grain prices and hurt consumers, to the Anglo-Irish trade war of the 1930s that left both sides economically bruised, history shows that tariff wars rarely end well.
In the Chicken War of the 1960s, US-European tensions over poultry spiralled into retaliatory taxes on potato starch and light trucks — the latter of which, remarkably, still affects automobile trade today.
In 1987, Ronald Reagan hit back at Japan with 100% tariffs on cars, leading to a slowed Japanese economy. In 1993, the EU's banana tariffs prompted the US to fight back through the World Trade Organisation.
The dispute dragged on for nearly 20 years. Even George W Bush's steel tariffs in 2002 were quickly withdrawn after EU retaliation threats.
These cautionary tales make one thing clear: tariffs may offer immediate political gain, but they rarely produce lasting economic benefit.
Donald Trump's 2018 tariff campaign was no exception. Beginning with duties on solar panels and washing machines, it escalated quickly, targeting Chinese goods and drawing tit-for-tat measures. American farmers, especially soybean producers, paid the price.
Yet Trump's team remained undeterred. Commerce Secretary Howard Lutnick asserted, "A manufacturing renaissance in the US, thanks to the tariffs, is going to drive growth, starting in the fourth quarter."
His words bore a striking resemblance to those of John Edgerton, president of the National Association of Manufacturers in 1930, who said tariffs would bring "a breath of relief to all industry and all business."
Nearly a century later, Kip Eideberg from the Association of Equipment Manufacturers countered the Trump narrative. "You can't just pick all the manufacturing process up and just move it over [to] the US," he argued, pointing out how global supply chains make such re-shoring impractical.
Economic historians Alexander Klein and Christopher Meissner have shown that tariffs historically reduce productivity by discouraging competition and allowing inefficient firms to survive.
Economist David Autor extended this argument, noting that modern tariffs have accelerated job losses in manufacturing regions and pushed workers into lower-productivity sectors like hospitality and healthcare.
These shifts drag down GDP. And despite scattered investments like those from Taiwanese tech firms, The Wall Street Journal reported that corporate spending intentions across the US have cooled under tariff uncertainty.
From madman theory to real-world fallout
Political observers have compared Trump's unpredictability to Richard Nixon's "madman theory" — a deliberate effort to appear irrational in order to intimidate adversaries. Yet, as with Hitler, such strategies risk spiralling beyond control. Hitler's trade war, as Douglas Irwin, Professor of Economics at Dartmouth College, reminds us, was only a prelude to his shooting war.
Irwin stated, "Mr Trump has done a lot of damage to America and the world. The president was right in at least one of his Rose Garden statements. With tariffs, he said, 'we can be so much wealthier than any country, it's not even believable.' He got that last bit right."
