The current tariff war has rattled the global markets and trade. While the impact on countless economies is evident, one could also interpret the sentiment by looking at news headlines alone.

Words like ‘escalate’, ‘harmful’, ‘panic’, and ‘retaliate’ show up one too many times in the above the fold.

No wonder the pessimistic nature of these news coverages has made Americans feel like a dark cloud of recession is hanging over them.

Despite the uncertainty associated with tariffs, it’s interesting to note that there was a time when tariffs were not perceived as a threat but as essential instruments of nation-building.

And this perception isn’t exclusive to the past. As we shall see, tariffs can play a symbiotic role with local manufacturing and energy policy to summon a positive economic outcome.

Tariffs From A Historical Perspective

A discussion on the history of tariffs is incomplete without mentioning the brainchild behind American tariffs, Alexander Hamilton.

As the first US Secretary of the Treasury, he laid the intellectual groundwork for the nation’s early economic model in his seminal Report on Manufactures (1791).

He argued that protective tariffs should be used to nurture America’s fledgling industrial base.

Hamilton’s model was nuanced:

• Imposing high tariffs on imports that the US could produce domestically. This move would protect American manufacturers from more mature foreign competition.
• Allow zero or minimal tariffs on imports that Americans couldn’t produce themselves.
• Use tariffs to raise government revenue, especially since the US had no income tax until 1913.

But Hamilton didn’t stop there.

He advocated the Tariff Act of 1789, the first legislation to be gazetted by the First Congress. The act served two key purposes: promoting trade and raising revenue for the federal government.

The Current State Of Tariffs And Fear

While tariffs were created from a vision of economic independence, their iterations today, especially Trump’s version, present a more aggressive front.

Trump’s tariffs were conceived with the following goals:

• Encouraging US consumers to purchase American-made goods.
• Increase the amount of tax.
• Attract more investments in the US.

Even though these goals make sense on paper, Trump’s trade salvos have spooked the markets. The current scenario mirrors the 2018 – 2019 US – China trade war too much for anyone’s comfort.

The threat of tariffs triggers several fears:

• Supply chain disruptions: Tariffs could sever reliable, cost-effective foreign sourcing arrangements.
• Higher costs: Businesses relying on foreign inputs face increased expenses.
• Squeezed margins: Import-heavy companies may find it hard to maintain profitability.
• Inflation: If the cost of goods rises and is passed to consumers, inflation can climb, prompting central banks to maintain higher interest rates.

Silver Lining Behind Market Uncertainty

Judging by the bleak recession warnings on mainstream media and the heated discourse among investors, fear rules over today’s global markets.

But still, keeping our heads up could do wonders.

Rather than being purely inflationary or restrictive, tariffs could catalyse structural change in the U.S. economy.

Going along the lines of Trump’s logic, US companies might bring production back to American soil if importing becomes too costly.

This reshoring process could:

• Revive domestic manufacturing, especially in sectors like steel, semiconductors, and consumer electronics.
• Encourage more jobs and higher employment, leading to stronger consumer spending and economic growth.
• Reduce reliance on foreign supply chains, reinforcing national resilience during geopolitical tension.

For example, when Trump imposed steel tariffs in 2018, US Steel restarted plants in Illinois and Alabama. Similar outcomes could be seen across other industries if tariffs are combined with investment incentives and infrastructure support.

Yes, tariffs may raise prices.

But they can also raise wages and employment. This balance between costs and benefits is where strategy becomes critical.

Tariffs on their own are blunt tools. When supported by domestic production and energy policy, their inflationary impact can be contained or even reversed.

‘Drill Baby Drill’ As An Inflation Hedge

One of America’s greatest strategic advantages in the tariff-inflation debate is energy dominance.

Under the Trump administration’s ‘Drill Baby Drill’ agenda, the U.S. accomplished a historic surge in domestic oil and gas production, briefly becoming the world’s top crude oil producer and achieving true energy independence for the first time in generations.

Here’s how scaling up drilling activities could be an ideal hedge against inflation:

• Energy abundance drives prices down: More American oil means cheaper fuel, slashing transportation and manufacturing costs economy-wide. This acts as a natural inflation relief valve, putting money back in consumers’ pockets.
• Tariffs meet their match: Even if trade policies raise import costs, affordable energy offsets those pressures, potentially neutralising inflation or even pushing prices lower.
• Jobs boom, prosperity rises: Expanding oil, gas, and LNG production doesn’t just strengthen exports. It creates high-wage jobs, revitalises communities, and secures America’s industrial backbone.

In short, tariffs and energy independence aren’t just compatible. They’re complementary forces for resilience.

There’s Good In Tariffs If You Take The Bigger Picture

Is fear justified in the sphere of tariff wars?

Rightfully so, but only because the markets are in jitters due to a possible recession and if the players react to fear instead of fundamentals.

However, tariffs don’t exist in isolation. When you connect the dots between tariffs, revived American manufacturing and increased oil and gas production, they can reshape the US economy for the better.

As the saying goes: Tariffs may raise prices, but they also raise jobs. And more jobs are bullish.