Ancient Rome used high tariffs to raise money too – and created other economic problems along the way

Tariffs are back in the headlines this week, with United States President Donald Trump introducing sweeping new tariffs of at least 10% on a vast range of goods imported to the US. For some countries and goods, the tariffs will be much higher.

Analysts have expressed shock and worry, warning the move could lead to inflation and possibly even recession for the US.

As someone who’s spent years researching the economy of Ancient Rome, it all feels a shade familiar.

In fact, tariffs were also used in Ancient Rome, and for some of the reasons that governments claim to be using them today.

Unfortunately for the Romans, however, these tariffs often led to higher prices, black markets and other economic problems.

Roman tariffs on luxury goods

As the Roman Empire expanded and became richer, its wealthy citizens demanded increasing amounts of luxury items, especially from Arabia, India and China. This included silk, pearls, pepper and incense.

There was so much demand for incense, for example, that growers in southern Arabia worked out how to harvest it twice a year. Pepper has been found on archaeological sites as far north as Roman Britain.

Around 70 CE the Roman writer Pliny – who later died in the eruption that buried Pompeii – complained that 100 million sesterces (a type of coin) drained from the empire every year due to luxury imports. About 50 million sesterces a year, he reckoned, was spent on trade from India alone.

In reality, however, the cost of these imports was even larger than Pliny thought.

An Egyptian document, known as the Muziris Papyrus, from about the same time Pliny wrote shows one boat load of imports from India was valued at 7 million sesterces.

Hundreds of boats laden with luxuries sailed from India to Egypt every year.

At Palmyra (an ancient city in what’s now Syria) in the second century CE, an inscription shows 90 million sesterces in goods were imported in just one month.

And in the first century BCE, Roman leader Julius Caesar gave his lover, Servilia (mother to his murderer Marcus Brutus), an imported black pearl worth 6 million sesterces. It’s often described as one of the most valuable pearls of all time.

So while there was a healthy level of trade in the other direction – with the Romans exporting plenty of metal wares, glass vessels and wine – demand for luxury imports was very high.

The Roman government charged a tariff of 25% (known as the tetarte) on imported goods.

The purpose of the tetarte was to raise revenue rather than protect local industry. These imports mostly could not be sourced in the Roman Empire. Many of them were in raw form and used in manufacturing items within the empire. Silk was mostly imported raw, as was cotton. Pearls and gemstones were used to manufacture jewellery.

With the volume and value of eastern imports at such high levels in imperial Rome, the tariffs collected were enormous.

One recent estimate suggests they could fund around one-third of the empire’s military budget.

Inflationary effects

Today, economic experts are warning Trump’s new tariffs – which he sees as a way to raise revenue and promote US-made goods – could end up hurting both the US and the broader global economy.

Today’s global economy has been deliberately engineered, while the global economy of antiquity was not. But warnings of the inflationary effects of tariffs are also echoed in ancient Rome too.

Pliny, for example, complained about the impact of tariffs on the street price of incense and pepper.

In modern economies, central banks fight inflation with higher interest rates, but this leads to reduced economic activity and, ultimately, less tax revenue. Reduced tax collection could cancel out increased tariff revenue.

It’s not clear if that happened in Rome, but we do know the emperors took inflation seriously because of its devastating impact on soldiers’ pay.

Black markets

Ancient traders soon became skilled at finding their way around paying tariffs to Roman authorities.

The empire’s borders were so long traders could sometimes avoid tariff check points, especially when travelling overland.

This helped strengthen black markets, which the Roman administration was still trying to deal with in the third century, when its economy hit the skids and inflation soared. This era became known as the Crisis of the Third Century.

I don’t subscribe to the view that you can draw a direct line between Rome’s high tariffs and the decline of the Roman Empire, but it’s certainly true that this inflation that tore through third century Rome weakened it considerably.

And just as it was for Rome, black markets loom as a potential challenge for the Trump administration too, given the length of its borders and the large volume of imports.

But the greatest danger of the new US tariffs is the resentment they will cause, especially among close allies such as Australia.

Rome’s tariffs were not directed at nations and were not tools of diplomatic revenge. Rome had other ways of achieving that.

Peter Edwell receives funding from the Australian Research Council.