The earliest theory of international trade is known as "Mercantilism". It first appeared in English writings in Tudor times, and was unchallenged until late in the 18th century. It still has adherents today, notably, it would seem, Donald Trump.
One of the fundamentals of mercantilism was that trade is what is called a "zero-sum game": that is, if someone is making a profit, it follows that someone else must be making an equivalent loss. Obviously, you want to be the profit-maker!
Secondly, the presumption is that the economics of a country are like those of a household, trying to balance income against expenditure. In trade, exports constitute income, imports constitute expenditure. The job of the state therefore is to encourage exports while reducing imports to the absolute minimum.
Thirdly, manufacturing of goods for consumption should be done at home rather than abroad, thus securing jobs. Therefore, as far as possible the state should attempt to import only raw materials rather than manufactured goods, and export manufactured goods rather than raw materials. It also follows that the importation of unnecessary luxury goods should be prohibited or at least strongly discouraged, thereby helping the trade balance. Therefore there were enormous customs or excise duties to be paid on Chinese tea and French wine and brandy. The wool industry, which was the foundation of the great bulk of the English economy, was closely protected by measures that included a ban on the export of raw wool, compulsory consumption at home (all corpses were to be wrapped in a woollen shroud for burial) and a total prohibition on the importation of finished clothes, which were to be seized and burnt if intercepted. (Young men gentlemen who contrived to flaunt the latest fashions from Italy or France were nicknamed "macaronis").
One unfortunate result of these tariffs was that smuggling was an enormous feature of 18th century life, Even the most respectable gentry and clergy had their own bootleggers, and customs and excise officials were greatly hated, not least because they were seen as agents of political nepotism and corruption.
As the British empires expanded in the 18th century, the new colonies and occupied territories had an important part to play. They should sell the mother country raw materials and foodstuffs, especially tropical produce that could not be grown in Britain, and also act as a guaranteed market for British manufactures. The colonies must not trade directly with other coutries, but only through Britain, and should be prevented from developing their own manufacturing base. Disputes arising from this were directly responsible for the oubreak of the war of American independence, through such famous incidents as the "Boston tea party".
Adam Smith published his groundbreaking book, "The weath of nations" at the same time, in which he rejected the mercantilist assumptions and made the case for Free Trade instead of tariffs. One of his most persuasive arguments was that of "Scottish wine". It was, he said, possible to grow grapes in Scotland, but any wine produced would be inferior to French wine. A Scottish wine industry would therefore need to be protected by tariffs or outright prohibition of imports; and the result would be that Scottish consumers would be forced to choose between inferior locally-produced wine or imports at inflated prices. Furthermore, France would no doubt retaliate with its own tariffs. Far better, he argued, to allow French imports and for Scotland to concentrate on producing something else (whisky, perhaps?) which could then be exported to France. Everyone would benefit. State intervention in the economy, Smith and his followers concluded, would result in reduced international trade, higher prices, poorer-quality goods and a worse deal for the consumer.
William Pitt, Prime Minister 1783-1801, was said to be a disciple of Smith's doctrines. He massively reduced many customs duties and negotited a commercial treaty with France, though this was soon made ineffective by the French Revolution. Smuggling was greatly reduced as a result.
At the end of the Napoleonic wars in 1815, the famous Corn Laws were passed, banning all imports of foreign grain below a certain price in order to protect British farmers and landowners. This was greatly resented by all classes in the towns, and provoked the formation of the famous "Anti-Corn Law League", led by Richard Cobden and John Bright. The League organised a highly successful nation-wide campaign, culminating in the final repeal of the Corn Laws by Robert Peel's government in 1846. Peel's Conservative Party was irretrievably split as a result, and did not win an election for the next 30 years. The young William Gladstone, a rising star of the Peelites, now chsnged sides and became Liberal Prime Minister for the first time in 1868. He remained a committed Free Trader throughout jis long political career. The repeal of the Corn Laws was only the most prominent pary of a general movement towards Free Trade in Britain in the first half of the 19th century, until there were virtually no trade restrictions at all.
From the 1870s, however, the picture changed again. The rapid expansion of railways and steamships meant that increasing quantities of cheap foreign food started to flood into western Europe. Prices fell and living standards rose, but farming came under pressure. In Europe, the newly-united German Empire under Bismarck imposed tariffs to protect German manufacturing industry against British competition, and his example was followed by many other countries. In Britain, farmers demanded protection against the competition from cheap American grain, but Protection was, in Disraeli's words, "Not only dead, but damned". Any attempt to build a tariff wall would be an admission that Britain was no longer the "Workshop of the World", that the country's economy was falling behind Germany and the U.S.A., and few could acknowledge that.
At the start of the 20th century, Joseph Chamberlain, a prominent minister in Balfour's Conservative government, proposed a new policy of tariffs, with exemption for goods from the Empire. This immediately split the government, and caused the young M.P. Winston Churchill to leave the party and join the Liberals. In 1906 the Liberals won the general election by an enormous majority, and Churchill soon gained his first experience as a cabinet minister. There was no movement on tariffs before the outbreak of war in 1914.
After 1918 the Liberal Party went into terminal decline and was relaced by Labour as the main opposition to the Conseratives, who were now united in advocating tariffs. In consequence, when in 1924 and again in 1929 there was a "hung Parliament", the remaining Liberals supported minority Labour governments begause both parties clung to the doctrines of Free Trade. The Conservatives under Baldwin won a substantial majority in the second election of 1924, but made no move towards tariffs. Baldwin unexpectedly appointed as his Chancellor of the Exchequer none other than Churchill, who had lost his seat in Parliament in 1922 and now rejoined the Conservatives!
The second minority Labour government of 1929-31 remanied wedded to Free Trade and a balanced budget, and disintegrated in the aftermath of the Wall Street Crash. In 1931 a general election resulted in an enormous majority for a "National Government" of representatives of all three parties, but when Neville Chamberlain (Joseph's son) was appointed Chancellor he proceeded to introduce athe first tariffs, which led to the resignation of most of the Liberal and Labour members. Churchill was left out in the cold, disagreeing with the government on several issues, and spent the 1930s in unprofitable opposition.
After 1945 all the main parties have been committed to negotiating trade deals and reducing tariffs.
