Foreign trade as fiscal policy: tariff setting and customs revenue in Sweden, 1830–1913

Two of the most defining trends of the nineteenth century were the growth of international trade and the increased role of government activities in the economy. In the conjuncture between these developments lie taxes on foreign trade. Sweden was one of the examples where customs revenue became the single most important source of revenue before WWI. This article sets out to test how this source of revenue could increase as much as it did. The analysis focuses mainly on trade policy and how tariffs were set and how that affected revenue. The results show that Swedish liberalisation of trade forced a switch in the fiscal structure of tariffs, moving revenue to fewer commodities. Increased importance was given to consumption goods with lower elasticity of demand. Trade continued to increase under fiscal taxation, which led to increases in revenue. During the early period increased revenue was achieved with higher tariffs on a few key commodities. Towards the end of the century tariffs on agricultural and capital goods became more fiscally relevant, which could have clashed with protectionist intentions. The article highlights that more work is needed on this fiscal component of trade policy.