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Tariffs have historically served a key role in the trade policy of the United States. Their purpose was to generate revenue for the federal government and to allow for import substitution industrialization (industrialization of a nation by replacing foreign imports with domestic production) by acting as a protective barrier around infant industries. They also aimed to reduce the trade deficit and the pressure of foreign competition. Tariffs were one of the pillars of the American System
that allowed the rapid development and industrialization of the United
States. The United States pursued a protectionist policy from the
beginning of the 19th century until the middle of the 20th century.
Between 1861 and 1933, they had one of the highest average tariff rates
on manufactured imports in the world. However American agricultural and
industrial were cheaper than rival products and the tariff had an impact
primarily on wool products. After 1942 the U.S. promoted worldwide free
trade.
According to Dartmouth economist Douglas Irwin, tariffs have
serve three primary purposes: "to raise revenue for the government, to
restrict imports and protect domestic producers from foreign
competition, and to reach reciprocity agreements that reduce trade
barriers." From 1790 to 1860, average tariffs increased from 20 percent to 60 percent before declining again to 20 percent.
From 1861 to 1933, which Irwin characterizes as the "restriction
period", the average tariffs increased to 50 percent and remained at
that level for several decades. From 1934 onwards, which Irwin
characterizes as the "reciprocity period", the average tariff declined
substantially until it leveled off at 5 percent.
Tariff revenues
Tariffs were the greatest (approaching 95% at times) source of federal revenue until the federal income tax
began after 1913. For well over a century the federal government was
largely financed by tariffs averaging about 20% on foreign imports. At
the end of the American Civil War
in 1865 about 63% of Federal income was generated by the excise taxes,
which exceeded the 25.4% generated by tariffs. In 1915 during World War I
tariffs generated only 30.1% of revenues. Since 1935 tariff income has
continued to be a declining percentage of Federal tax income.
Historical trends
Average tariff rates (France, UK, US)
Average Tariff Rates in US (1821–2016)
U.S. Trade Balance and Trade Policy (1895–2015)
Average Tariff Rates for Selected Countries (1913–2007)
Average Tariff Rates on manufactured products
Average Levels of Duties (1875 and 1913)
After the United States achieved independence in 1783, under the Articles of Confederation,
the U.S. federal government, could not collect taxes directly but had
to "request" money from each state—an almost fatal flaw for a federal
government. Lack of ability to tax directly was one of several major
flaws in the Articles of Confederation. The ability to tax directly was
addressed in the drafting of the United States Constitution in May to September 1787 Constitutional Convention (United States) in Philadelphia. It came into effect in 1789. It specified that the United States House of Representatives
has to originate all tax and tariff laws. The new government needed a
way to collect taxes from all the states that were easy to enforce and
had only a nominal cost to the average citizen. They had just finished a
war on "Taxation without Representation". The Tariff of 1789
was the second bill signed by President George Washington imposing a
tariff of about 5% on nearly all imports, with a few exceptions. In 1790
the United States Revenue Cutter Service was established to primarily enforce and collect the import tariffs. This service later became the United States Coast Guard.
Many American intellectuals and politicians during the country's
catching-up period felt that the free trade theory advocated by British
classical economists was not suited to their country. They argued that
the country should develop manufacturing industries and use government
protection and subsidies for this purpose, as Britain had done before
them. Many of the great American economists of the time, until the last
quarter of the 19th century, were strong advocates of industrial
protection: Daniel Raymond who influenced Friedrich List, Mathew Carey and his son Henry, who was one of Lincoln's economic advisers. The intellectual leader of this movement was Alexander Hamilton, the first Secretary of the Treasury of the United States (1789-1795). Thus, it was against David Ricardo's theory of comparative advantage
that the United States protected its industry. They pursued a
protectionist policy from the beginning of the 19th century until the
middle of the 20th century, after the Second World War.
In Report on Manufactures
which is considered the first text to express modern protectionist
theory, Alexander Hamilton argued that if a country wished to develop a
new activity on its soil, it would have to temporarily protect it.
According to him, this protection against foreign producers could take
the form of import duties or, in rare cases, prohibition of imports. He
called for customs barriers to allow American industrial development and
to help protect infant industries, including bounties (subsidies)
derived in part from those tariffs. He also believed that duties on raw
materials should be generally low.
Hamilton argued that despite an initial "increase of price" caused by
regulations that control foreign competition, once a "domestic
manufacture has attained to perfection… it invariably becomes cheaper".
Alexander Hamilton and Daniel Raymond were among the first theorists to present the infant industry argument.
Hamilton was the first to use the term "infant industries" and to
introduce it to the forefront of economic thinking. He believed that
political independence was predicated upon economic independence.
Increasing the domestic supply of manufactured goods, particularly war
materials, was seen as an issue of national security. And he feared that
Britain's policy towards the colonies would condemn the United States
to be only producers of agricultural products and raw materials.
Britain initially did not want to industrialize the American
colonies, and implemented policies to that effect (for example, banning
high value-added manufacturing activities). Under British rule, America
was denied the use of tariffs to protect its new industries. Thus, the
American Revolution was, to some extent, a war against this policy, in
which the commercial elite of the colonies rebelled against being forced
to play a lesser role in the emerging Atlantic economy. This explains
why, after independence, the Tariff Act of 1789 was the second bill of
the Republic signed by President Washington allowing Congress to impose a
fixed tariff of 5% on all imports, with a few exceptions
The Congress passed a tariff act (1789), imposing a 5% flat rate tariff on all imports.
Between 1792 and the war with Britain in 1812, the average tariff level
remained around 12.5%. In 1812 all tariffs were doubled to an average
of 25% in order to cope with the increase in public expenditure due to
the war. A significant shift in policy occurred in 1816, when a new law
was introduced to keep the tariff level close to the wartime
level—especially protected were cotton, woolen, and iron goods.
The American industrial interests that had blossomed because of the
tariff lobbied to keep it, and had it raised to 35 percent in 1816. The
public approved, and by 1820, America's average tariff was up to 40
percent.
In the 19th century, statesmen such as Senator Henry Clay continued Hamilton's themes within the Whig Party under the name "American System
which consisted of protecting industries and developing infrastructure
in explicit opposition to the "British system" of free trade.
The American Civil War (1861-1865) was partially fought over the
issue of tariffs. The agrarian interests of the South were opposed to
any protection, while the manufacturing interests of the North wanted to
maintain it. The fledgling Republican Party led by Abraham Lincoln,
who called himself a "Henry Clay tariff Whig", strongly opposed free
trade. Early in his political career, Lincoln was a member of the
protectionist Whig Party and a supporter of Henry Clay. In 1847, he
declared: "Give us a protective tariff, and we shall have the greatest nation on earth". He implemented a 44-percent tariff during the Civil War—in part to pay for railroad subsidies and for the war effort, and to protect favored industries.
Tariffs remained at this level even after the war, thus the victory of
the North in the Civil War ensured that the United States remained one
of the greatest practitioners of tariff protection for industry.
From 1871 to 1913, "the average U.S. tariff on dutiable imports
never fell below 38 percent [and] gross national product (GNP) grew 4.3
percent annually, twice the pace in free trade Britain and well above
the U.S. average in the 20th century," notes Alfred Eckes Jr, chairman of the U.S. International Trade Commission under President Reagan.
In 1896, the GOP pledged platform pledged to "renew and emphasize
our allegiance to the policy of protection, as the bulwark of American
industrial independence, and the foundation of development and
prosperity. This true American policy taxes foreign products and
encourages home industry. It puts the burden of revenue on foreign
goods; it secures the American market for the American producer. It
upholds the American standard of wages for the American workingman".
In 1913, following the electoral victory of the Democrats in
1912, there was a significant reduction in the average tariff on
manufactured goods from 44% to 25%. However, the First World War
rendered this bill ineffective, and new "emergency" tariff legislation
was introduced in 1922, after the Republicans returned to power in 1921.
According to Ha-Joon Chang,
the United States, while being protectionist, was the fastest growing
economy in the world throughout the 19th century and into the 1920s.
It was only after the Second World War that the U.S. liberalized its
trade (although not as unequivocally as Britain did in the
mid-nineteenth century).
Colonial Era to 1789
In
the colonial era, before 1775, nearly every colony levied its own
tariffs, usually with lower rates for British products. There were taxes
on ships (on a tonnage basis), import taxes on slaves, export taxes on
tobacco, and import taxes on alcoholic beverages. The London government insisted on a policy of mercantilism whereby only British ships could trade in the colonies. In defiance, some American merchants engaged in smuggling.
During the Revolution, the British blockade from 1775 to 1783 largely ended foreign trade. In the 1783–89 Confederation Period,
each state set up its own trade rules, often imposing tariffs or
restrictions on neighboring states. The new Constitution, which went
into effect in 1789, banned interstate tariffs or trade restrictions, as
well as state taxes on exports.
Early National period, 1789–1828
The framers of the United States Constitution gave the federal government authority to tax, stating that Congress has the power to "... lay
and collect taxes, duties, imposts and excises, pay the debts and
provide for the common defense and general welfare of the United
States." and also "To regulate Commerce with foreign Nations, and among
the several States, and with the Indian Tribes." Tariffs between states
is prohibited by the U.S. Constitution, and all domestically made
products can be imported or shipped to another state tax-free.
Responding to an urgent need for revenue and a trade imbalance
with England that was fast destroying the infant American industries and
draining the nation of its currency, the First United States Congress passed, and President George Washington signed, the Hamilton Tariff of 1789, which authorized the collection of duties on imported goods. Customs
duties as set by tariff rates up to 1860 were usually about 80–95% of
all federal revenue. Having just fought a war over taxation (among other
things) the U.S. Congress wanted a reliable source of income that was
relatively unobtrusive and easy to collect. It also sought to protect
the infant industries that had developed during the war but which were
now threatened by cheaper imports, especially from England. Tariffs and
excise taxes were authorized by the United States Constitution and
recommended by the first United States Secretary of the Treasury, Alexander Hamilton
in 1789 to tax foreign imports and set up low excise taxes on whiskey
and a few other products to provide the Federal Government with enough
money to pay its operating expenses and to redeem at full value U.S.
Federal debts and the debts the states had accumulated during the
Revolutionary War. The Congress set low excise taxes on only a few
goods, such as, whiskey, rum, tobacco, snuff and refined sugar. The tax on whiskey was highly controversial and set off massive protests by Western Farmers in the Whiskey Rebellion
of 1794, which was suppressed by General Washington at the head of an
army. The whiskey excise tax collected so little and was so despised it
was abolished by President Thomas Jefferson in 1802.
All tariffs were on a long list of goods (dutiable goods) with
different customs rates and some goods on a "free" list. Books and
publications were nearly always on the free list. Congress spent
enormous amounts of time figuring out these tariff import tax schedules.
With tariffs providing the basic federal revenue, an embargo on
trade, or an enemy blockade, would threaten havoc. This happened in
connection with the American economic warfare against Britain in the
1807–15 period. In 1807 imports dropped by more than half and some
products became much more expensive or unobtainable. Congress passed the
Embargo Act of 1807 and the Non-Intercourse Act (1809)
to punish British and French governments for their actions;
unfortunately their main effect was to reduce imports even more. The War of 1812
brought a similar set of problems as U.S. trade was again restricted by
British naval blockades. The fiscal crisis was made much worse by the
abolition of the First Bank of the U.S., which was the national bank. It was reestablished right after the war.
The lack of imported goods relatively quickly gave very strong
incentives to start building several U.S. industries in the Northeast.
Textiles and machinery manufacturing plants especially grew. Many new
industries were set up and run profitably during the wars and about half
of them failed after hostilities ceased and normal import competition
resumed. Industry in the U.S. was advancing up the skill set, innovation
knowledge and organization curve as they adapted to the Industrial
Revolution's new machines and techniques.
The Tariff Act of 1789 imposed the first national source of revenue for the newly formed United States. The new U.S. Constitution
ratified in 1789, allowed only the federal government to levy uniform
tariffs. Only the federal government could set tariff rates (customs),
so the old system of separate state rates disappeared. The new law taxed
all imports at rates from 5 to 15 percent. These rates were primarily
designed to generate revenue to pay the annual expenses of the federal
government and the national debt and the debts the states had
accumulated during the American War of Independence
and to also promote manufactures and independence from foreign nations,
especially for defense needs. Hamilton believed that all Revolutionary
War debt should be paid in full to establish and keep U.S. financial
credibility. In addition to income in his Report on Manufactures
Treasury Secretary Alexander Hamilton proposed a far-reaching plan to
use protective tariffs as a lever for rapid industrialization. In the
late 18th century the industrial age was just starting and the United
States had little or no textile industry—the heart of the early
Industrial Revolution. The British government having just lost the Revolutionary War
tried to maintain their near monopoly on cheap and efficient textile
manufacturing by prohibiting the export of textile machines, machine
models or the emigration of people familiar with these machines.
Clothing in the early United States was nearly all hand made by a very
time consuming and expensive process—just like it had been made for
centuries before. The new textile manufacturing techniques in Britain
were often over thirty times cheaper as well as being easier to use,
more efficient and productive. Hamilton believed that a stiff tariff on
imports would not only raise income but "protect" and help subsidize
early efforts at setting up manufacturing facilities that could compete
with British products.
Samuel Slater
in 1789 emigrated (illegally since he was familiar with textile
manufacturing) from Britain. Looking for opportunities he heard of the
failing attempts at making cotton mills in Pawtucket, Rhode Island.
Contacting the owners he promised to see if he could fix their
mills—they offered him a full partnership if he succeeded. Declaring
their early attempts unworkable he proceeded from January 1790 to
December 1790 to build the first operational textile manufacturing
facility in the United States. The Industrial Revolution
was off and running in the United States. Initially the cost of their
textiles was slightly higher than the cost of equivalent British goods
but the tariff helped protect their early start-up industry.
Ashley notes that:
- From 1790 onwards there were constant alterations in the tariff
between 1792 and 1816 there were some twenty-five Tariff Acts passed,
all modifying the customs duties in one way or another. But Hamilton's
Report, and the ideas it embodied, do not seem to have exercised any
special influence on the legislation of this period; the motives were
always financial.
Higher tariffs were adopted during and after the War of 1812, when nationalists such as Henry Clay and John C. Calhoun
saw the need for more federal income and more industry. In wartime,
they declared, having a home industry was a necessity to avoid
shortages. Likewise owners of the small new factories that were
springing up in the northeast to mass-produce boots, hats, nails and
other common items wanted higher tariffs that would significantly
protect them when the more efficient British producers returned after
the war ended. A 10% discount on the customs tax was offered on items
imported in American ships, so that the American merchant marine would
be supported.
Once industrialization and mass production started, the demand
for higher and higher tariffs came from manufacturers and factory
workers. They believed that their businesses should be protected from
the lower wages and more efficient factories of Britain and the rest of
Europe. Nearly every northern Congressman was eager to logroll a higher
tariff rate for his local industry. Senator Daniel Webster,
formerly a spokesperson for Boston's merchants who imported goods (and
wanted low tariffs), switched dramatically to represent the
manufacturing interests in the Tariff of 1824.
Rates were especially high for bolts of cloth and for bar iron, of
which Britain was a low-cost producer. The culmination came in the Tariff of 1828, ridiculed by free traders as the "Tariff of Abominations",
with import custom duties averaging over 25 percent. Intense political
opposition to higher tariffs came from Southern Democrats and plantation
owners in South Carolina who had little manufacturing industry and
imported some products with high tariffs. They would have to pay more
for imports. They claimed their economic interest was being unfairly
injured. They attempted to "nullify" the federal tariff and spoke of
secession from the Union (see the Nullification Crisis). President Andrew Jackson
let it be known he would use the U.S. Army to enforce the law, and no
state supported the South Carolina call for nullification. A compromise
ended the crisis included a lowering of the average tariff rate over ten
years to a rate of 15% to 20%.
Second Party System, 1829–1859
The Democrats dominated the Second Party System
and set low tariffs designed to pay for the government but not protect
industry. Their opponents the Whigs wanted high protective tariffs but
usually were outvoted in Congress. Tariffs soon became a major political
issue as the Whigs (1832–1852) and (after 1854) the Republicans wanted to protect their mostly northern industries and constituents by voting for higher tariffs and the Southern Democrats,
which had very little industry but imported many goods voted for lower
tariffs. Each party as it came into power voted to raise or lower
tariffs under the constraints that the Federal Government always needed a
certain level of revenues. The United States public debt was paid off in 1834 and President Andrew Jackson,
a strong Southern Democrat, oversaw the cutting of the tariff rates
roughly in half and eliminating nearly all federal excise taxes in about
1835.
Henry Clay and his Whig Party,
envisioning a rapid modernization based on highly productive factories,
sought a high tariff. Their key argument was that startup factories, or
"infant industries", would at first be less efficient than European
(British) producers. Furthermore, American factory workers were paid
higher wages than their European competitors. The arguments proved
highly persuasive in industrial districts. Clay's position was adopted
in the 1828 and 1832 Tariff Acts. The Nullification Crisis
forced a partial abandonment of the Whig position. When the Whigs won
victories in the 1840 and 1842 elections, taking control of Congress,
they re-instituted higher tariffs with the Tariff of 1842.
In examining these debates Moore finds that they were not precursors to
Civil War. Instead they looked backward and continued the old debate
whether foreign trade policy should embrace free trade or protectionism.
Walker Tariff
The Democrats won in 1845, electing James K. Polk as president. Polk succeeded in passing the Walker tariff
of 1846 by uniting the rural and agricultural factions of the entire
country for lower tariffs. They sought a level of a "tariff for revenue
only" that would pay the cost of government but not show favoritism to
one section or economic sector at the expense of another. The Walker
Tariff actually increased trade with Britain and others and brought in
more revenue to the federal treasury than the higher tariff. The average
tariff on the Walker Tariff was about 25%. While protectionists in
Pennsylvania and neighboring states were angered, the South achieved its
goal of setting low tariff rates before the Civil War.
Low tariff of 1857
The Walker Tariff remained in place until 1857, when a nonpartisan coalition lowered them again with the Tariff of 1857 to 18%. This was in response to the British repeal of their protectionist "Corn Laws".
The Democrats in Congress, dominated by Southern Democrats, wrote
and passed the tariff laws in the 1830s, 1840s, and 1850s, and kept
reducing rates, so that the 1857 rates were down to about 15%, a move
that boosted trade so overwhelmingly that revenues actually increased,
from just over $20 million in 1840 ($0.5 billion in 2020 dollars), to
more than $80 million by 1856 ($1.8 billion).
The South had almost no complaints but the low rates angered many
Northern industrialists and factory workers, especially in Pennsylvania,
who demanded protection for their growing iron industry. The Republican Party
replaced the Whigs in 1854 and also favored high tariffs to stimulate
industrial growth; it was part of the 1860 Republican platform.
Third Party System
After the Second Party System ended in 1854 the Democrats lost
control and the new Republican Party had its opportunity to raise rates.
The Morrill Tariff
significantly raising tariff rates became possible only after the
Southern Senators walked out of Congress when their states left the
Union, leaving a Republican majority. It was signed by Democratic
President James Buchanan in early March 1861 shortly before President Abraham Lincoln
took office. Pennsylvania iron mills and New England woolen mills
mobilized businessmen and workers to call for high tariffs, but
Republican merchants wanted low tariffs. The high tariff advocates lost
in 1857, but stepped up their campaign by blaming the economic recession
of 1857 on the lower rates. Economist Henry Charles Carey of Philadelphia was the most outspoken advocate, along with Horace Greeley and his influential newspaper, the New York Tribune. Increases were finally enacted in February 1861 after Southerners resigned their seats in Congress on the eve of the Civil War.
Some historians in recent decades have minimized the tariff issue
as a cause of the war, noting that few people in 1860–61 said it was of
central importance to them. Compromises were proposed in 1860–61 to
save the Union, but they did not involve the tariff.
Arguably, the effects of a tariff enacted in March 1861 could have made
little effect upon any delegation which met prior to its signing. It is
indicative of the Northern industrial supported and anti-agrarian
position of the 1861 Republican-controlled congress. Some secessionist
documents do mention a tariff issue, though not nearly as often as the
preservation of the institution of slavery. However, a few libertarian economists place more importance on the tariff issue. The arguments that tariffs were a major cause of the Civil War have become a staple of the Lost Cause of the Confederacy.
1860–1912
Civil War
During the war far more revenue was needed, so the rates were raised
again and again, along with many other taxes such as excise taxes on
luxuries and income taxes on the rich.
By far most of the wartime government revenue came from bonds and loans
($2.6 billion), not taxes ($357 million) or tariffs ($305 million).
The Morrill Tariff took effect a few weeks before the war began on April 12, 1861, and was not collected in the South. The Confederate States of America
(CSA) passed its own tariff of about 15% on most items, including many
items that previously were duty-free from the North. Previously tariffs
between states were prohibited. The Confederates believed that they
could finance their government by tariffs. The anticipated tariff
revenue never appeared as the Union Navy blockaded their ports and the
Union army restricted their trade with the Northern states. The
Confederacy collected a mere $3.5 million in tariff revenue from the
Civil War start to end and had to resort to inflation and confiscation
instead for revenue.
Reconstruction era
Historian Howard K. Beale
argued that high tariffs were needed during the Civil War, but were
retained after the war for the benefit of Northern industrialists, who
would otherwise lose markets and profits. To keep political control of
Congress, Beale argued, Northern Industrialists worked through the
Republican Party and supported Reconstruction
policies that kept low-tariff Southern whites out of power. The Beale
thesis was widely disseminated by the influential survey of Charles A. Beard, The Rise of American Civilization (1927).
In the late 1950s historians rejected the Beale–Beard thesis by
showing that Northern businessmen were evenly divided on the tariff, and
were not using Reconstruction policies to support it.
Politics of protection
The
iron and steel industry, and the wool industry, were the well-organized
interests groups that demanded (and usually obtained) high tariffs
through support of the Republican Party. Industrial workers had much
higher wages than their European counterparts, and they credited it to
the tariff and voted Republican.
Democrats were divided on the issue, in large part because of
pro-tariff elements in the Pennsylvania party who wanted to protect the
growing iron industry, as well as pockets of high tariff support in
nearby industrializing states. However President Grover Cleveland
made low tariffs the centerpiece of Democratic Party policies in the
late 1880s. His argument is that high tariffs were an unnecessary and
unfair tax on consumers. The South and West generally supported low
tariffs, and the industrial East high tariffs. Republican William McKinley was the outstanding spokesman for high tariffs, promising it would bring prosperity for all groups.
After the Civil War, high tariffs remained as the Republican
Party remained in office and the Southern Democrats were restricted from
office. Advocates insisted that tariffs brought prosperity to the
nation as a whole and no one was really injured. As industrialization
proceeded apace throughout the Northeast, some Democrats, especially
Pennsylvanians, became high tariff advocates.
Farmers and wool
The
Republican high-tariff advocates appealed to farmers with the theme
that high-wage factory workers would pay premium prices for foodstuffs.
This was the "home market" idea, and it won over most farmers in the
Northeast, but it had little relevance to the southern and western
farmers who exported most of their cotton, tobacco and wheat. In the
late 1860s the wool manufacturers (based near Boston and Philadelphia)
formed the first national lobby, and cut deals with wool-growing farmers
in several states. Their challenge was that fastidious wool producers
in Britain and Australia marketed a higher quality fleece than the
Americans, and that British manufacturers had costs as low as the
American mills. The result was a wool tariff that helped the farmers by a
high tariff rate on imported wool—a tariff the American manufacturers
had to pay—together with a high tariff on finished woolens and worsted
goods.
U.S. industrial output
Apart
from wool and woolens, American industry and agriculture—and industrial
workers—had become the most efficient in the world in most industries
by the 1880s as they took the lead in the Industrial Revolution.
No other country had the industrial capacity, large market, high
efficiency and low costs, or the complex distribution system needed to
compete in most markets in the vast American market. Most imports were a
few "luxury" goods. Indeed, it was the British who watched cheaper
American products flooded their home islands. The London Daily Mail in 1900 complained:
We have lost to the American manufacturer electrical
machinery, locomotives, steel rails, sugar-producing and agricultural
machinery, and latterly even stationary engines, the pride and backbone
of the British engineering industry.
Nevertheless, some American manufacturers and union workers demanded
the high tariff be maintained. The tariff represented a complex balance
of forces. Railroads, for example, consumed vast quantities of steel. To
the extent tariffs raised steel prices, they paid much more making
possible the U.S steel industry's massive investment to expand capacity
and switch to the Bessemer process and later to the open hearth furnace.
Between 1867 and 1900 U.S. steel production increased more than 500
times from 22,000 tons to 11,400,000 tons and Bessemer steel rails,
first made in the U.S that would last 18 years under heavy traffic,
would come to replace the old wrought iron rail that could only endure
two years under light service.
Taussig says that in 1881, British steel rails sold for $31 a ton, and
if Americans imported them they paid a $28/ton tariff, giving $59/ton
for an imported ton of rails. American mills charged $61/ton and made a
good profit, which was then reinvested into increased capacity, higher
quality steels, higher wages and benefits and more efficient production.
By 1897 the American steel rail price had dropped to $19.60 per ton
compared to the British price at $21.00—not including the $7.84 duty
charge—demonstrating that the tariff had performed its purpose of giving
the industry time to become competitive.
Then the U.S. steel industry became an exporter of steel rail to
England selling below the British price and during WW I would become the
largest supplier of steel to the allies. From 1915 through 1918, the
largest American steel company, U.S. Steel, alone delivered more steel
each year than Germany and Austria-Hungary combined, totaling 99,700,000
tons during WW I.
The Republicans became masters of negotiating exceedingly complex
arrangements so that inside each of their congressional districts there
were more satisfied "winners" than disgruntled "losers". The tariff
after 1880 was an ideological relic with no longer any economic
rationale.
Cleveland tariff policy
Democratic President Grover Cleveland
redefined the issue in 1887, with his stunning attack on the tariff as
inherently corrupt, opposed to true republicanism, and inefficient to
boot: "When we consider that the theory of our institutions guarantees
to every citizen the full enjoyment of all the fruits of his industry
and enterprise... it is plain that the exaction of more than [minimal
taxes] is indefensible extortion and a culpable betrayal of American
fairness and justice." The election of 1888 was fought primarily over the tariff issue, and Cleveland lost. Republican Congressman William McKinley argued,
Free foreign trade gives our money, our manufactures, and
our markets to other nations to the injury of our labor, our
tradespeople, and our farmers. Protection keeps money, markets, and
manufactures at home for the benefit of our own people.
Democrats campaigned energetically against the high McKinley tariff
of 1890, and scored sweeping gains that year; they restored Cleveland to
the White House in 1892. The severe depression that started in 1893
ripped apart the Democratic party. Cleveland and the pro-business Bourbon Democrats
insisted on a much lower tariff. His problem was that Democratic
electoral successes had brought in Democratic congressmen from
industrial districts who were willing to raise rates to benefit their
constituents. The Wilson–Gorman Tariff Act
of 1894 did lower overall rates from 50 percent to 42 percent, but
contained so many concessions to protectionism that Cleveland refused to
sign it (it became law anyway).
McKinley tariff policy
President Teddy Roosevelt watches GOP team pull apart on tariff issue
McKinley campaigned heavily in 1896
on the high tariff as a positive solution to depression. Promising
protection and prosperity to every economic sector, he won a smashing
victory. The Republicans rushed through the Dingley tariff
in 1897, boosting rates back to the 50 percent level. Democrats
responded that the high rates created government sponsored "trusts"
(monopolies) and led to higher consumer prices. McKinley won reelection
by an even bigger landslide and started talking about a post-tariff era
of reciprocal trade agreements. Reciprocity went nowhere; McKinley's
vision was a half century too early. The Republicans split bitterly on the Payne–Aldrich Tariff of 1909. Republican President Theodore Roosevelt
(1901–1909) saw the tariff issue was ripping his party apart, so he
postponed any consideration of it. The delicate balance flew apart on
under Republican William Howard Taft.
He campaigned for president in 1908 for tariff "reform", which everyone
assumed meant lower rates. The House lowered rates with the Payne Bill,
then sent it to the Senate where Nelson Wilmarth Aldrich
mobilized high-rate Senators. Aldrich was a New England businessman and
a master of the complexities of the tariff, the Midwestern Republican
insurgents were rhetoricians and lawyers who distrusted the special
interests and assumed the tariff was "sheer robbery" at the expense of
the ordinary consumer. Rural America believed that its superior morality
deserved special protection, while the dastardly immorality of the
trusts—and cities generally—merited financial punishment. Aldrich baited
them. Did the insurgents want lower tariffs? His wickedly clever Payne–Aldrich Tariff Act of 1909 lowered the protection on Midwestern farm products, while raising rates favorable to his Northeast.
By 1913 with the new income tax generating revenue, the Democrats in Congress were able to reduce rates with the Underwood Tariff.
The outbreak of war in 1914 made the impact of tariffs of much less
importance compared to war contracts. When the Republicans returned to
power they returned the rates to a high level in the Fordney–McCumber Tariff of 1922. The next raise came with the Smoot–Hawley Tariff Act of 1930 at the start of the Great Depression.
Tariff with Canada
The Canadian–American Reciprocity Treaty increased trade between 1855 and its ending in 1866. When it ended Canada turned to tariffs. The National Policy was a Canadian economic program introduced by John A. Macdonald's Conservative Party
in 1879 after it returned to power. It had been an official policy,
however, since 1876. It was based on high tariffs to protect Canada's
manufacturing industry. Macdonald campaigned on the policy in the 1878 election, and handily beat the Liberal Party, which supported free trade.
Efforts to restore free trade with Canada collapsed when Canada rejected a proposed reciprocity treaty in fear of American imperialism in the 1911 federal election.
Taft negotiated a reciprocity agreement with Canada, that had the
effect of sharply lowering tariffs. Democrats supported the plan but
Midwestern Republicans bitterly opposed it. Barnstorming the country for
his agreement, Taft undiplomatically pointed to the inevitable
integration of the North American economy, and suggested that Canada
should come to a "parting of the ways" with Britain. Canada's
Conservative Party, under the leadership of Robert Borden,
now had an issue to regain power from the low-tariff Liberals; after a
surge of pro-imperial anti-Americanism, the Conservatives won. Ottawa
rejected reciprocity, reasserted the National Policy and went to London
first for new financial and trade deals. The Payne Aldrich Tariff of
1909 actually changed little and had slight economic impact one way or
the other, but the political impact was enormous. The insurgents felt
tricked and defeated and swore vengeance against Wall Street and its
minions Taft and Aldrich. The insurgency led to a fatal split down the
middle in 1912 as the GOP lost its balance wheel.
1913 to present
Starting in the Civil War, protection was the ideological cement holding the Republican coalition together.
High tariffs were used to promise higher sales to business, higher
wages to industrial workers, and higher demand for their crops to
farmers. Democrats said it was a tax on the little man. After 1900
Progressive insurgents said it promoted monopoly. It had greatest
support in the Northeast, and greatest opposition in the South and West.
The Midwest was the battle ground.
The tariff issue was pulling the GOP apart. Roosevelt tried to
postpone the issue, but Taft had to meet it head on in 1909 with the Payne–Aldrich Tariff Act. Eastern conservatives led by Nelson W. Aldrich
wanted high tariffs on manufactured goods (especially woolens), while
Midwesterners called for low tariffs. Aldrich outmaneuvered them by
lowering the tariff on farm products, which outraged the farmers. The
great battle over the high Payne–Aldrich Tariff Act in 1910 ripped the Republicans apart and set up the realignment in favor of the Democrats.
Woodrow Wilson made a drastic lowering of tariff rates a major priority for his presidency. The 1913 Underwood Tariff
cut rates, but the coming of World War I in 1914 radically revised
trade patterns. Reduced trade and, especially, the new revenues
generated by the federal income tax
made tariffs much less important in terms of economic impact and
political rhetoric. The Wilson administration desired a 'revamping' of
the current banking system, "... so that the banks may be the instruments, not the masters, of business and of individual enterprise and initiative.". President Wilson achieved this in the Federal Reserve Act
of 1913. Working with the bullish Senator Aldrich and former
presidential candidate William Jennings Bryan, he perfected a way to
centralize the banking system to allow Congress to closely allocate
paper money production.
The Federal Reserve Act, with the Sixteenth Amendment of the
Constitution, would create a trend of new forms of government funding.
Ihe Democrats lowered the tariff in 1913 but the economic dislocations
of the First World War made it irrelevant. When the Republicans returned
to power in 1921 they again imposed a protective tariff. They raised it again with the Smoot–Hawley Tariff Act of 1930 to meet the Great Depression in the United States.
But that made the depression worse. This time it backfired, as Canada,
Britain, Germany, France and other industrial countries retaliated with
their own tariffs and special, bilateral trade deals. American imports
and exports both went into a tailspin.
The Democrats promised an end to protection on a reciprocal
country-by-country basis (which they did), hoping this would expand
foreign trade (which it did not). By 1936 the tariff issue had faded
from politics, and the revenue it raised was small. In World War II,
both tariffs and reciprocity were insignificant compared to trade
channeled through Lend-Lease. Low rates dominated the debate for the rest of the 20th century. In 2017 Donald Trump promised to use protective tariffs as a weapon to restore greatness to the economy.
Tariffs and the Great Depression
The
years 1920 to 1929 are generally misdescribed as years in which
protectionism increased in Europe. In fact, from a general point of
view, the crisis was preceded in Europe by trade liberalisation. The
weighted average of tariffs remained tendentially the same as in the
years preceding the First World War: 24.6% in 1913, as against 24.9% in
1927. In 1928 and 1929, tariffs were lowered in almost all developed
countries.
In addition, the Smoot-Hawley Tariff Act was signed by Hoover on June
17, 1930, while the Wall Street crash took place in the fall of 1929.
Most of the trade contraction occurred between January 1930 and July
1932, before most protectionist measures were introduced (except for the
limited measures applied by the United States in the summer of 1930).
In the view of Maurice Allais, it was therefore the collapse of international liquidity that caused the contraction of trade, not customs tariffs.
Milton Friedman
also held the opinion that the Smoot–Hawley tariff of 1930 did not
cause the Great Depression. Douglas A. Irwin writes : "most economists,
both liberal and conservative, doubt that Smoot Hawley played much of a
role in the subsequent contraction."
Peter Temin,
explains a tariff is an expansionary policy, like a devaluation as it
diverts demand from foreign to home producers. He notes that exports
were 7 percent of GNP in 1929, they fell by 1.5 percent of 1929 GNP in
the next two years and the fall was offset by the increase in domestic
demand from tariff. He concludes that contrary the popular argument,
contractionary effect of the tariff was small. (Temin, P. 1989. Lessons from the Great Depression, MIT Press, Cambridge, Mass)
William J. Bernstein wrote:
Between
1929 and 1932, real GDP fell 17 percent worldwide, and by 26 percent in
the United States, but most economic historians now believe that only a
minuscule part of that huge loss of both world GDP and the United
States’ GDP can be ascribed to the tariff wars. .. At the time of
Smoot-Hawley's passage, trade volume accounted for only about 9 percent
of world economic output. Had all international trade been eliminated,
and had no domestic use for the previously exported goods been found,
world GDP would have fallen by the same amount — 9 percent. Between 1930
and 1933, worldwide trade volume fell off by one-third to one-half.
Depending on how the falloff is measured, this computes to 3 to 5
percent of world GDP, and these losses were partially made up by more
expensive domestic goods. Thus, the damage done could not possibly have
exceeded 1 or 2 percent of world GDP — nowhere near the 17 percent
falloff seen during the Great Depression... The inescapable conclusion:
contrary to public perception, Smoot-Hawley did not cause, or even
significantly deepen, the Great Depression.
Paul Krugman writes that protectionism does not lead to recessions.
According to him, the decrease in imports (which can be obtained by the
introduction of tariffs) has an expansionary effect, i.e. favourable to
growth. Thus in a trade war, since exports and imports will decrease
equally, for the whole world, the negative effect of a decrease in
exports will be compensated by the expansionary effect of a decrease in
imports. A trade war therefore does not cause a recession. Furthermore,
he notes that the Smoot-Hawley tariff did not cause the Great
Depression. The decline in trade between 1929 and 1933 "was almost
entirely a consequence of the Depression, not a cause. Trade barriers
were a response to the Depression, in part a consequence of deflation."
Trade liberalization
Tariffs up to the Smoot–Hawley Tariff Act
of 1930, were set by Congress after many months of testimony and
negotiations. In 1934, the U.S. Congress, in a rare delegation of
authority, passed the Reciprocal Tariff Act
of 1934, which authorized the executive branch to negotiate bilateral
tariff reduction agreements with other countries. The prevailing view
then was that trade liberalization may help stimulate economic growth.
However, no one country was willing to liberalize unilaterally. Between
1934 and 1945, the executive branch negotiated over 32 bilateral trade
liberalization agreements with other countries. The belief that low
tariffs led to a more prosperous country are now the predominant belief
with some exceptions. Multilateralism is embodied in the seven tariff
reduction rounds that occurred between 1948 and 1994. In each of these
"rounds", all General Agreement on Tariffs and Trade
(GATT) members came together to negotiate mutually agreeable trade
liberalization packages and reciprocal tariff rates. In the Uruguay
round in 1994, the World Trade Organization (WTO) was established to help establish uniform tariff rates.
Currently only about 30% of all import goods are subject to
tariffs in the United States, the rest are on the free list. The
"average" tariffs now charged by the United States are at a historic
low. The list of negotiated tariffs are listed on the Harmonized Tariff Schedule as put out by the United States International Trade Commission.
Post World War II
After the war the U.S. promoted the General Agreement on Tariffs and Trade
(GATT) established in 1947, to minimize tariffs and other restrictions,
and to liberalize trade among all capitalist countries. In 1995 GATT
became the World Trade Organization (WTO); with the collapse of Communism its open markets/low tariff ideology became dominant worldwide in the 1990s.
American industry and labor prospered after World War II, but
hard times set in after 1970. For the first time there was stiff
competition from low-cost producers around the globe. Many rust belt
industries faded or collapsed, especially the manufacture of steel, TV
sets, shoes, toys, textiles and clothing. Toyota and Nissan
threatened the giant domestic auto industry. In the late 1970s Detroit
and the auto workers union combined to fight for protection. They
obtained not high tariffs, but a voluntary restriction of imports from
the Japanese government. Quotas were two-country diplomatic agreements
that had the same protective effect as high tariffs, but did not invite
retaliation from third countries. By limiting the number of Japanese
automobiles that could be imported, quotas inadvertently helped Japanese
companies push into larger, and more expensive market segments. The
Japanese producers, limited by the number of cars they could export to
America, opted to increase the value of their exports to maintain
revenue growth. This action threatened the American producers'
historical hold on the mid- and large-size car markets.
The Chicken tax was a 1964 response by President Lyndon B. Johnson to tariffs placed by Germany (then West Germany) on importation of US chicken. Beginning in 1962, during the President Kennedy
administration, the US accused Europe of unfairly restricting imports
of American poultry at the request of West German chicken farmers.
Diplomacy failed, and in January 1964, two months after taking office,
President Johnson retaliated by imposing a 25 percent tax on all
imported light trucks. This directly affected the German built Volkswagen vans.
Officially it was explained that the light trucks tax would offset the
dollar amount of imports of Volkswagen vans from West Germany with the
lost American sales of chickens to Europe. But audio tapes from the
Johnson White House reveal that in January 1964, President Johnson was
attempting to convince United Auto Workers's president Walter Reuther,
not to initiate a strike just prior the 1964 election and to support
the president's civil rights platform. Reuther in turn wanted Johnson to
respond to Volkswagen's increased shipments to the United States.
1980s to present
During the Reagan
and George H. W. Bush administrations Republicans abandoned
protectionist policies, and came out against quotas and in favor of the
GATT/WTO policy of minimal economic barriers to global trade. Free trade
with Canada came about as a result of the Canada–U.S. Free Trade Agreement of 1987, which led in 1994 to the North American Free Trade Agreement
(NAFTA). It was based on Reagan's plan to enlarge the scope of the
market for American firms to include Canada and Mexico. President Bill Clinton, with strong Republican support in 1993, pushed NAFTA through Congress over the vehement objection of labor unions.
Likewise, in 2000 Clinton worked with Republicans to give China entry into WTO and "most favored nation"
trading status (i.e., the same low tariffs promised to any other WTO
member). NAFTA and WTO advocates promoted an optimistic vision of the
future, with prosperity to be based on intellectuals skills and
managerial know-how more than on routine hand labor. They promised that
free trade meant lower prices for consumers. Opposition to liberalized
trade came increasingly from labor unions, who argued that this system
also meant lower wages and fewer jobs for American workers who could not
compete against wages of less than a dollar an hour. The shrinking size
and diminished political clout of these unions repeatedly left them on
the losing side.
Despite overall decreases in international tariffs, some tariffs
have been more resistant to change. For example, due partially to tariff
pressure from the European Common Agricultural Policy, US agricultural subsidies have seen little decrease over the past few decades, even in the face of recent pressure from the WTO during the latest Doha talks.
On March 5, 2002, President George W. Bush placed tariffs on imported steel.
Deindustrialization
According to the Economic Policy Institute,
free trade has created a large trade deficit in the United States for
decades, leading to the closure of many factories and cost the United
States millions of jobs in the manufacturing sector. Trade deficits
replaces well-paying manufacturing jobs with low-wage service jobs.
Moreover, trade deficits lead to significant wage losses, not only for
workers in the manufacturing sector, but also for all workers throughout
the economy who do not have a university degree. For example, in 2011,
100 million full-time, full-year workers without a university degree
suffered an average loss of $1,800 on their annual salary.
Indeed, these workers who have lost their jobs in the
manufacturing sector and who have to accept a reduction in their wages
to find work in other sectors, are creating competition that reduces the
wages of workers already employed in these other sectors. In addition,
the threat of relocation of production facilities leads workers to
accept wage cuts to keep their jobs.
According to the EPI, trade agreements have not reduced trade
deficits but rather increased them. The growing trade deficit with China
comes from China's manipulation of its currency, dumping policies,
subsidies, trade
barriers that give it a very important advantage in international
trade. In addition, industrial jobs lost by imports from China are
significantly better paid than jobs created by exports to China. So even
if imports were equal to exports, workers would still lose out on their
wages.
The manufacturing sector is a sector with very high productivity
growth, which promotes high wages and good benefits for its workers.
Indeed, this sector accounts for more than two thirds of private sector
research and development and employs more than twice as many scientists
and engineers as the rest of the economy. The manufacturing sector
therefore provides a very important stimulus to overall economic growth.
Manufacturing is also associated with well-paid service jobs such as
accounting, business management, research and development and legal
services. Deindustrialisation is therefore also leading to a significant
loss of these service jobs. Deindustrialization thus means the
disappearance of a very important driver of economic growth.
Smuggling and Coast Guard
Historically, high tariffs have led to high rates of smuggling. The United States Revenue Cutter Service
was established by Secretary Hamilton in 1790 as an armed maritime law
and custom enforcement service. Today it remains the primary maritime
law enforcement force in the United States.
The U.S. Customs and Border Protection (CBP) is a federal law enforcement agency of the United States Department of Homeland Security
charged with regulating and facilitating international trade,
collecting customs (import duties or tariffs approved by the U.S.
Congress), and enforcing U.S. regulations, including trade, customs and
immigration. They man most border crossing stations and ports. When
shipments of goods arrive at a border crossing or port, customs officers
inspect the contents and charge a tax according to the tariff formula
for that product. Usually the goods cannot continue on their way until
the custom duty is paid. Custom duties are one of the easiest taxes to
collect, and the cost of collection is small.
Tariffs and historical American politicians
In
1896, the GOP platform pledged to "renew and emphasize our allegiance
to the policy of protection, as the bulwark of American industrial
independence, and the foundation of development and prosperity. This
true American policy taxes foreign products and encourages home
industry. It puts the burden of revenue on foreign goods; it secures the
American market for the American producer. It upholds the American
standard of wages for the American workingman."
George Washington
"I use no porter or cheese in my family, but such as is made in America," the inaugural President George Washington
wrote, boasting that these domestic products are "of an excellent
quality." One of the first acts of Congress Washington signed was a
tariff among whose stated purpose was "the encouragement and protection
of manufactures." In his 1790 State of the Union Address, Washington justified his tariff policy for national security reasons:
A free people ought not only to be armed, but
disciplined; to which end a uniform and well-digested plan is requisite;
and their safety and interest require that they should promote such
manufactories as tend to render them independent of others for
essential, particularly military, supplies
Thomas Jefferson
As President Thomas Jefferson
wrote in explaining why his views had evolved to favor more
protectionist policies: "In so complicated a science as political
economy, no one axiom can be laid down as wise and expedient for all
times and circumstances, and for their contraries."
After the War of 1812,
Jefferson's position began to resemble that of Washington, some level
of protection was necessary to secure the nation's political
independence. He said:
experience has taught me that manufactures are now as
necessary to our independence as to our comfort: and if those who quote
me as of a different opinion will keep pace with me in purchasing
nothing foreign where an equivalent of domestic fabric can be obtained,
without regard to difference of price
Henry Clay
In 1832, then the United States Senator from Kentucky,
Henry Clay said about his disdain for "free traders" that "it is not
free trade that they are recommending to our acceptance. It is in
effect, the British colonial system that we are invited to adopt; and,
if their policy prevail, it will lead substantially to the
re-colonization of these States, under the commercial dominion of Great
Britain." Clay said:
When gentlemen have succeeded in their design of an
immediate or gradual destruction of the American System, what is their
substitute? Free trade! Free trade! The call for free trade is as
unavailing as the cry of a spoiled child, in its nurse's arms, for the
moon, or the stars that glitter in the firmament of heaven. It never has
existed; it never will exist. Trade implies, at least two parties. To
be free, it should be fair, equal and reciprocal.
Clay explained that "equal and reciprocal" free trade "never has
existed; [and] it never will exist." He warned against practicing
"romantic trade philanthropy… which invokes us to continue to purchase
the produce of foreign industry, without regard to the state or
prosperity of our own." Clay that he was "utterly and irreconcilably
opposed" to trade which would "throw wide open our ports to foreign
productions" without reciprocation.
James Monroe
In 1822, President James Monroe
observed that "whatever may be the abstract doctrine in favor of
unrestricted commerce," the conditions necessary for its
success—reciprocity and international peace—"has never occurred and can
not be expected." Monroe said, "strong reasons… impose on us the
obligation to cherish and sustain our manufactures."
Abraham Lincoln
President Abraham Lincoln
declared, "Give us a protective tariff and we will have the greatest
nation on earth." Lincoln warned that "the abandonment of the protective
policy by the American Government… must produce want and ruin among our
people."
Lincoln similarly said that, "if a duty amount to full protection
be levied upon an article" that could be produced domestically, "at no
distant day, in consequence of such duty," the domestic article "will be
sold to our people cheaper than before."
Additionally, Lincoln argued that based on economies of scale,
any temporary increase in costs resulting from a tariff would eventually
decrease as the domestic manufacturer produced more.
Lincoln did not see a tariff as a tax on low-income Americans because it
would only burden the consumer according to the amount the consumer
consumed.
By the tariff system, the whole revenue is paid by the consumers of
foreign goods... the burthen of revenue falls almost entirely on the
wealthy and luxurious few, while the substantial and laboring many who
live at home, and upon home products, go entirely free.
Lincoln argued that a tariff system was less intrusive than
domestic taxation: The tariff is the cheaper system, because the duties,
being collected in large parcels at a few commercial points, will
require comparatively few officers in their collection; while by the
direct tax system, the land must be literally covered with assessors and
collectors, going forth like swarms of Egyptian locusts, devouring
every blade of grass and other green thing.
William McKinley
President William McKinley stated the United States' stance under the Republican Party as:
Under free trade the trader is the master and the
producer the slave. Protection is but the law of nature, the law of
self-preservation, of self-development, of securing the highest and best
destiny of the race of man.
[It is said] that protection is immoral.... Why, if protection builds
up and elevates 63,000,000 [the U.S. population] of people, the
influence of those 63,000,000 of people elevates the rest of the world.
We cannot take a step in the pathway of progress without benefiting
mankind everywhere
[Free trade] destroys the dignity and independence of
American labor... It will take away from the people of this country who
work for a living—and the majority of them live by the sweat of their
faces—it will take from them heart and home and hope. It will be
self-destruction.
He also categorically rejected the "cheaper is better" argument:
They [free traders] say, 'Buy where
you can buy the cheapest.' That is one of their maxims… Of course, that
applies to labor as to everything else. Let me give you a maxim that is
a thousand times better than that, and it is the protection maxim: 'Buy
where you can pay the easiest.' And that spot of earth is where labor
wins its highest rewards.
They say, if you had not the Protective Tariff things would be a
little cheaper. Well, whether a thing is cheap or whether it is dear
depends on what we can earn by our daily labor. Free trade cheapens the
product by cheapening the producer. Protection cheapens the product by
elevating the producer.
The protective tariff policy of the Republicans... has made the lives of
the masses of our countrymen sweeter and brighter, and has entered the
homes of America carrying comfort and cheer and courage. It gives a
premium to human energy, and awakens the noblest aspiration in the
breasts of men. Our own experience shows that it is the best for our
citizenship and our civilization and that it opens up a higher and
better destiny for our people.
Theodore Roosevelt
President Theodore Roosevelt
believed that America's economic growth was due to the protective
tariffs, which helped her industrialize. He acknowledged this in his
State of the Union address from 1902:
The country has acquiesced in the wisdom of the
protective-tariff principle. It is exceedingly undesirable that this
system should be destroyed or that there should be violent and radical
changes therein. Our past experience shows that great prosperity in this
country has always come under a protective tariff.
Donald Trump
The Trump tariffs were imposed by executive order (not by act of Congress) during the presidency of Donald Trump as part of his economic policy. In January 2018, Trump imposed tariffs on solar panels and washing machines of 30 to 50 percent. He soon imposed tariffs on steel (25%) and aluminum (10%) from most countries. On June 1, 2018, this was extended on the European Union, Canada, and Mexico.
Separately, on May 10, the Trump administration set a tariff of 25% on
818 categories of goods imported from China worth $50 billion.
The only country which remained exempt from the steel and aluminum
tariffs was Australia. Argentinian and Brazilian aluminium tariffs were
started on December 2, 2019 in reaction to currency manipulation.
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