What Trump could learn from the British and Irish trade war of the 1930s

During his election campaign, US president Donald Trump claimed^[1] the word tariff is “more beautiful than ‘love’”. Now in office, Trump has targeted his closest neighbours and trading partners with those self same policies. He initially concentrated his levies on Canada, China and Mexico – two of which share land borders with the US – before implementing blanket tariffs^[2] on all steel and aluminium imports.

History shows us the impacts these policies can have. In 1932, during Neville Chamberlain’s time as British chancellor, the country slapped what became 40% levies on key exports (including cattle, butter and other agricultural products) from the then Irish Free State. These were promptly met by Irish retaliation on British goods including coal and steel.

A trade war ensued – and lasted in some form for almost six years.

As with Trump today, raising tariffs is often partly about some other policy goal. As far as the British-Irish trade war goes, I show in my new book Britain and Ireland From the Treaty to the Troubles^[3] that the initial beef (pun intended) was over a decades-long debt obligation. These annuities, as they were known, were predominantly owed by Irish farmers to Anglo-Irish landowners, and were widely disliked.

In early 1932 Éamon de Valera^[4] secured electoral victory in Ireland for his Fianna Fáil party, partly on the basis of refusing to hand over this money. At £5 million^[5], it was a significant sum for a government that took in around £25 million annually.

Instead, de Valera planned to use the annuities for domestic purposes. He wanted to reward his agricultural and working-class electoral bases principally in Ireland’s west, as well as win over new voters with the nationalist and anti-English nature of his message.

The legality of the annuities dispute^[6] was ambiguous. But de Valera withheld the money, and to recoup the missing millions the British imposed tariffs and punitive quotas. This was swiftly followed by retaliatory measures from Dublin – just as Trump’s moves have seen reaction^[7] from abroad.

The stakes were high. A massive 92% of Irish exports went to the UK, and civil servants in Dublin fretted about the knock-on effects. In the short term, they were right to. Exports of cattle, bacon and other goods collapsed, and emergency domestic subsidy was needed to plug the gap.

Irish attempts to land a major trade deal with the US by way of compensation went nowhere, and Britain remained its key customer for decades.

Yet, unlike Trump, de Valera had a clear end goal into which the tariff war fitted rather well. He wanted to retool Irish farming away from livestock towards crops, and invest in Ireland’s nascent industry elsewhere. This included expanding the country’s energy independence and kick-starting its manufacturing sector.

The retained annuities and the increased political capital his government gained from the trade war both helped with these objectives.

It took until about 1937, after two more^[8] election wins^[9] and a referendum^[10] victory for de Valera, for British leaders to accept that the Irish public broadly backed their leader. They realised that a bilateral agreement was necessary.

The dispute was finally ended in April 1938. As the ink dried on a deal that saw tariffs dropped in exchange for a one-off payment from Dublin and the return of three ports to Ireland, the British media hailed the achievement of Chamberlain – now prime minister.

But this reaction also tells us something. Initially, Chamberlain was portrayed^[11] as a genius who had clearly won. But then critics pointed to it being a rather better deal for de Valera (the £10 million one-off sum was nowhere near the £100 million^[12] the British had a nominal claim for).

In this new stance, it had been a great deal precisely because Chamberlain had been so magnanimous. A terrible deal was actually a great deal. Some of that mentality could be seen in reactions^[13] to the Munich Agreement^[14] with Adolf Hitler a few months later.

All told, the consequences had been significant. Perhaps 3%^[15] of the Irish economy was lost.

In the meantime, Irish immigration to Britain consequently ticked up as people looked for work. Smuggling at the Northern Irish border ballooned, leading to additional costs to police a frontier where cattle were hurried across unmanned fields and rivers to avoid the tariff.