Research Article
Tariffs and Democratic Decline: Economic Burdens and Executive Overreach in Protectionist Trade Policies
Weldeslassie Hailai Abera*
Issue:
Volume 13, Issue 3, September 2025
Pages:
95-117
Received:
24 May 2025
Accepted:
12 August 2025
Published:
14 October 2025
DOI:
10.11648/j.ijebo.20251303.11
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Abstract: Background: Although protectionist trade policies are usually analysed from an economic perspective, their broader effects on democratic governance are less explored. Historical examples, from the Smoot-Hawley Act of 1930 to modern trade disputes, show that tariff-led economic nationalism goes beyond market regulation, notably affecting institutional power structures and democratic accountability mechanisms. Objective: This study examines how protectionist trade policies impact economic freedom, individual liberty, and democratic institutions by analysing the political economy mechanisms through which tariffs influence government actions. We specifically explore whether the adoption of tariffs consistently leads to executive overreach while also placing regressive economic burdens on citizens. Methods and Main Ideas: We employ a comprehensive mixed-methods approach, combining econometric analysis of U.S. trade data (2000-2020) with qualitative case studies of historical tariff incidents and institutional analysis of democratic indicators. Our theoretical framework incorporates Hayek's theory of market distortion, Lockean principles of liberty, and Dahl's model of polyarchy to identify causal links between tariff revenue and changes in institutional power. We examine three interconnected pathways: the erosion of economic freedom resulting from market distortions, restrictions on individual liberty stemming from regressive consumption effects, and the suppression of democratic expression due to the expansion of executive authority. Results: Our econometric analysis indicates that tariff regimes with an average of 20% reduce GDP by between 0.23% and 0.57% annually (p<0.01). The prices of goods subject to tariffs increase by 10.3 percentage points more than those of untariffed goods (p<0.001). Notably, households with lower incomes experience greater welfare losses than those with higher incomes, losing 2.1% of their income compared to 0.6%. Regarding democratic effects, executive agencies that collect tariff revenue see their budgets rise by 14.3%, whereas other agencies only see a 3.7% increase (p<0.01). Additionally, congressional oversight hearings declined by 23% following executive tariff actions. During periods of high tariffs, the Freedom House Press Freedom Index decreases by 2.8 points over three years (p<0.05). Moreover, 60% of trade policy journalists report self-censoring due to pressure from regulators. Conclusions: This study demonstrates that protectionist policies foster self-sustaining cycles of democratic decline by enabling executive expansion, funded by tariff revenues, which systematically suppresses dissent while imposing regressive economic burdens. Policy options focused on innovation lead to better outcomes in both economic (10-year GDP impact: +20.2% versus -6.0%) and democratic spheres. They generate 5.6 times more jobs per pound while maintaining institutional balance. These findings highlight the need for a comprehensive reassessment of trade policy evaluation frameworks, emphasising that economic nationalism carries substantial democratic costs that go beyond traditional economic inefficiencies.
Abstract: Background: Although protectionist trade policies are usually analysed from an economic perspective, their broader effects on democratic governance are less explored. Historical examples, from the Smoot-Hawley Act of 1930 to modern trade disputes, show that tariff-led economic nationalism goes beyond market regulation, notably affecting institution...
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