Fifty-seven years after Britain repealed its Corn Laws, free trade underwent attack. France, Germany, Japan and the US had raised tariffs on imports. Joseph Chamberlain,the founding Chancellor of the University of Birmingham, campaigned for tariffs on the Empire’s imports; food prices might rise, but proceeds would go on social reform. 116 years on, President Trump raises US tariffs on many Chinese exports from 10% to 25%.

Between May 10 and 13, the closing values of the Dow Jones Ordinary market index fell 2.4%. Other US share price indices slid too. The intervening three days’ big news was Trump’s tariff jump. US quoted companies’ equity values total $30 trillion. Trump’s tariff hike surprised. Perhaps other bad news amplified its impact. Stock markets can overshoot. Yet the US has many unquoted companies. So $700 billion is a rough market measure of the damage the tariff hike would wreak to the US economy’s future stream of discounted profits. This vast figure exceeds three months of Britain’s GDP. So the stock markets knew Trump’s tariff war would harm America.

Stephen Redding and colleagues put the annual cost of Trump’s 2018 10% tariffs against China at some $17 billion. A tariff’s cost is roughly proportional to the square of the rate. If so, the extra annual damage from May’s tariff jump could be $89 billion. With profits 37% of US GDP, and real interest rates negligible, Wall Street guessed the tariff war’s equivalent half-life was perhaps fourteen years. China’s retaliation was anticipated. Descending a tariff tower needs time. Removing the 1930s’ trade barriers took several decades.

So what is a tariff? And is Trump Old Joe reincarnated?

A tariff taxes something imported. Its home price rises, cutting demand. Output of home-made substitutes increases. So imports drop. The balance of payments improves. Government revenue rises sneakily, without touching cynosure tax rates. Jobs in some home industries are created. Aggregate home demand rises. Within the country, some get big benefits; but the damage is spread so broadly that few may notice it. These are its main direct effects. Many politicians love them. And a big country can get an extra plum: some pain is passed to foreign exporters.

Most indirect effects are gradual, subtle – and negative. Protectionist policies squeeze your exports. Resources switch into sectors where the home country is less efficient. That generally means waste for you, and for the world. A victim may retaliate with tit-for-tat tariffs - as China has. That only cuts your citizens’ levels of potential real income and welfare.

We can dream up freak cases where tariffs might help everyone. But whatever good taxing trade might do, another, more direct policy, does better. Tariffs are dominated. Even where a big country can gain (as Hitler showed) by bullying trading partners, it, and its victims, could all gain more with free trade plus side-bribes. In real estate transactions, one party’s gain is another’s loss. Trade is different.

Does Trump’s tariff war have silver linings? It just might. The recent havoc in Turkey and Iran illustrate the power of his trade and finance sanctions. In future, combating global warming may need such sanctions, against countries still extracting or burning fossil fuels. More safeguards for intellectual property rents, to spur and fund innovation?  Conceivably less Steuerraub, the downward spiral of profits taxes, spun by seamy tax havens like the Caymans, Guernsey, Luxembourg and Panama? The biggest hope is this: the costs of Trump’s protectionist tantrum become so glaringly obvious, that the world reverts to its long term, post-war path towards freer trade.

Tariffs and towers link Trump with Old Joe. Both men thought tariffs might extend their countries’ threatened hegemonies. But like Beijing’s response, Joe’s 1903 tariffs were largely retaliatory. And Joe’s would not build walls, but fund help for the poor.