There’s a chart that’s been doing the rounds in recent weeks – American businessman Marc Andreessen tweeted it, and then it was reposted by Donald Trump himself.

The chart is pretty simple: it shows the proportion of American federal government revenues coming from tariffs, going all the way back to the early days of American independence.

And to glance at, it tells a compelling story. For nearly all of the 19th century, tariffs imposed on goods imported into America provided more than half the government’s revenues.

The president’s interpretation was as follows: “The tariffs, and tariffs alone, created this vast wealth for our country. Then we switched over to income tax. We were never so wealthy as during this period. Tariffs will pay off our debt and, MAKE AMERICA WEALTHY AGAIN!”

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The first half of his post is quite true. America’s federal economy was largely built on revenues from tariffs. When Alexander Hamilton was designing much of the federal infrastructure, not to mention paying the debts from the War of Independence, he chose to fund it with tariffs and duties on goods imported to the country.

Revenue wasn’t the only reason for the tariffs. They were there, too, to protect the country’s nascent industries. But those tariffs were the main source of income for a long time. What changed? Well, from the late 19th century onwards, the size of the American state expanded. Paying for the Civil War was expensive; funding a growing welfare state and national infrastructure in the following decades likewise.

But tariffs can only go so far. There is only so high one can lift these fees before they begin to stifle activity, making goods so expensive to import that domestic consumers face economic damage. That brings us back to the data in the chart approvingly cited by the president.

Take the same numbers and divide them by GDP – the total size of the US economy – another way of skinning it (indeed, the way you’d normally look at long-run historical figures like this). Now everything looks somewhat different. You can see that at no point in American history – even in those early days when tariffs were far higher than today and a far more important source of revenues – did the total amount they raised exceed 6% of gross domestic product. This is not accidental.

It was because tariffs couldn’t raise enough to finance the Federal administration that successive administrations began to collect other taxes on American citizens rather than imports, starting with excise taxes and income taxes in the Civil War. Those taxes, collected by the Internal Revenue Service, ballooned in the following decades – as did the size of the state.

Today the American federal budget is orders of magnitude bigger than two centuries ago (albeit still much smaller than those you find in Europe). The new administration has made it an explicit policy to cut back on waste, led in part by Elon Musk and his DOGE (the Department of Government Efficiency, whose name was seemingly chosen in order to fulfil Mr Musk’s ambition to turn everything into a meme). But there are limits to how far one can cut: a superpower with a large military, vast infrastructure networks such as road and rail, not to mention public health and education systems, does not come for free.

Even so, raising revenue is just one purpose of tariffs. They can also be used as a negotiating tool with other countries (indeed, this might well be their main function in the hands of Mr Trump). They can be used to protect domestic industries against competition.

Whatever the purpose, after decades of relatively free trade around much of the world – most notably America itself – we are living now in an era where tariffs are back. And this story has only just begun.