Trade cost on Endowment model
You can easily think of an endowment economy with taxes, and think of the taxes as transaction costs or trading costs. I'm sure classic textbooks like Mas-Collel address this point, perhaps in an exercise. Your intuition is right, the larger "t" is, the more deadweight loss there is, and this is reflected by transactions that do not occur. A large enough "t" can prevent all transactions from occurring, just as a large enough tax can kill a market.