What is protectionism in the context of United States economic policy?

Protectionism in the United States refers to economic policies that use tariffs and other barriers to restrict imported goods. The primary goal is to encourage local industry by making imported goods less competitive.

When was protectionism most prevalent in the United States, and what were the main regional disagreements surrounding it?

Protectionism was most prevalent in the United States during the 19th century. It was largely supported by Northern industries seeking protection from foreign competition, while Southern states, reliant on agricultural exports like cotton, generally opposed it in favor of free trade.

How did the United States' approach to protectionism change after World War II?

Following World War II, the United States shifted towards promoting free trade. This included advocating for the General Agreement on Tariffs and Trade (GATT), which later evolved into the World Trade Organization (WTO), aiming to liberalize trade globally.

What has been the recent trend in protectionist sentiment in the United States since 2016?

Protectionism has seen a resurgence in popularity since the election of Donald Trump in 2016, indicating a shift away from the post-World War II emphasis on free trade.

According to economic historian Paul Bairoch, what was the United States' historical role regarding protectionism?

Economic historian Paul Bairoch described the U.S. as the "homeland and bastion of modern protectionism," highlighting its significant and long-standing use of protectionist strategies.

What was the British policy towards the American colonies concerning manufacturing, and how did it influence the American Revolution?

The British government implemented policies to discourage manufacturing in the American colonies, aiming to keep them primarily as suppliers of raw materials. This policy was a contributing factor to the American Revolution, as colonial commercial elites rebelled against these economic restrictions.

What was the significance of the Tariff Act of 1789?

The Tariff Act of 1789 was the second bill signed into law by President Washington, establishing a national revenue source by imposing a 5% tariff on all imports. It also aimed to protect nascent American industries that had developed during the Revolutionary War.

What arguments did Alexander Hamilton make in favor of protectionist policies?

Alexander Hamilton, as the first Secretary of the Treasury, argued that political independence was linked to economic independence. He believed that government support, such as import duties, was crucial to protect and nurture 'infant industries' in the U.S. from foreign competition, ensuring national security, particularly for war materials.

How did the average tariff rate in the U.S. change between 1792 and 1812?

Between 1792 and the War of 1812, the average tariff level remained around 12.5%. It was then doubled to an average of 25% in 1812 to help finance the war effort.

What was the impact of the War of 1812 on U.S. tariffs and industry?

The War of 1812 led to increased public expenditure, prompting a doubling of tariffs to an average of 25%. The disruption of trade also provided strong incentives for domestic industries, particularly in textiles and machinery, to develop and expand.

According to Michael Lind, what was the general trend of U.S. trade policy from 1816 to World War II?

Michael Lind characterized U.S. trade policy from the Tariff of 1816 until World War II as predominantly protectionist, with a brief shift towards free trade occurring only in 1945.

What was the "American System" in the context of 19th-century U.S. politics?

The "American System" was an economic plan championed by statesmen like Henry Clay within the Whig Party. It continued Hamilton's themes of protectionism, advocating for tariffs to support domestic industry and national development.

What role did tariff disputes play in the American Civil War?

While the primary cause of the Civil War was slavery, tariff disputes were also a significant issue. The agrarian South, favoring free trade, clashed with the industrial North, which sought protective tariffs, contributing to the sectional tensions.

How did the Republican Party under Abraham Lincoln approach tariffs?

Abraham Lincoln, identifying as a "Henry Clay tariff Whig," strongly supported protectionist policies. During the Civil War, his administration implemented a 44% tariff, partly to fund the war effort, railroad subsidies, and protect favored industries.

What was the effect of the Fordney-McCumber Tariff (1922) and the Smoot-Hawley Tariff Act (1930)?

The Fordney-McCumber Tariff of 1922 restored high tariff rates after World War I, but did not prevent an economic crash. The Smoot-Hawley Tariff Act of 1930, intended to protect American industries during the Great Depression, backfired by triggering retaliatory tariffs from other nations and worsening the global economic downturn.

Why did Southern states historically oppose protectionist policies?

Slave-holding Southern states generally opposed protectionism because their economy was heavily reliant on agriculture, particularly cotton exports to Britain. They benefited from free trade and had less need for the mechanization that protectionism aimed to foster in the North.

What was the Nullification Crisis, and what was its connection to tariffs?

The Nullification Crisis, primarily involving South Carolina, was a political confrontation over federal tariffs in the 1830s. South Carolina argued that states had the right to nullify federal laws they deemed unconstitutional or harmful to their economic interests, specifically targeting high tariffs.

How did the Democratic Party's stance on tariffs evolve in the mid-19th century?

In the mid-19th century, the Democratic Party, influenced by Southern interests, generally favored lower tariffs. However, pockets of support for higher tariffs existed within the party, particularly in industrial areas like Pennsylvania.

What was the Walker Tariff of 1846, and what was its impact?

The Walker Tariff of 1846, enacted under President James K. Polk, lowered tariff rates to a level intended for revenue only, not protection. It successfully increased trade, including with Britain, and generated more revenue than previous higher tariffs, satisfying Southern agricultural interests.

What characterized the tariff policy during the Second Party System (1829-1859)?

During the Second Party System, tariffs were a major political issue. Whigs and later Republicans generally advocated for higher tariffs to protect Northern industries, while Democrats, influenced by the South, favored lower tariffs. Tariff rates fluctuated based on which party held power, often balancing revenue needs with protectionist demands.

What was the Tariff of 1857, and why was it enacted?

The Tariff of 1857 lowered tariff rates to approximately 18%. It was enacted partly in response to Britain's repeal of its protectionist Corn Laws and was supported by a coalition that included Southern Democrats, though it angered Northern industrialists.

How did the Morrill Tariff impact the lead-up to the Civil War?

The Morrill Tariff, which significantly raised tariff rates, was passed in March 1861 just before the Civil War began. Its passage was facilitated by the departure of Southern senators, and it reflected the industrial interests of the Republican-controlled Congress, indicating a continued commitment to protectionism.

What was the Beale thesis regarding the post-Civil War tariffs and Reconstruction?

Historian Howard K. Beale argued that high tariffs were maintained after the Civil War primarily to benefit Northern industrialists. He suggested that these industrialists supported Reconstruction policies to keep low-tariff Southern whites out of political power, thereby preserving their economic advantages.

How did the iron and steel industries influence Republican tariff policy in the late 19th century?

The iron and steel industries, along with the wool industry, were well-organized interest groups that strongly advocated for high tariffs. They typically achieved this through their support of the Republican Party, believing that tariffs protected high wages for American industrial workers.

What was President Grover Cleveland's stance on tariffs in the late 1880s?

President Grover Cleveland strongly opposed high tariffs, viewing them as corrupt, inefficient, and an unfair tax on consumers. He made lower tariffs a central policy of the Democratic Party during his presidency.

What arguments did William McKinley use to advocate for high tariffs?

William McKinley, a prominent Republican spokesman for high tariffs, argued that protectionism would bring prosperity to all sectors of the economy. He promoted the idea that free foreign trade benefited other nations at the expense of American labor, tradespeople, and farmers.

How did the "home market" idea influence farmers' support for protectionism?

The "home market" idea suggested that high-wage factory workers would purchase more foodstuffs, thus benefiting farmers. This argument appealed to farmers in the Northeast, though it had less relevance for those in the South and West who primarily exported their agricultural goods.

What was the economic situation of U.S. industry by the 1880s, and how did it relate to tariffs?

By the 1880s, American industry and agriculture had become highly efficient and globally competitive, leading the Industrial Revolution. Despite this, some manufacturers and workers continued to demand high tariffs, which had become more of an ideological relic than an economic necessity, though they did facilitate massive investment in industries like steel.

How did the Payne-Aldrich Tariff of 1909 affect the Republican Party?

The Payne-Aldrich Tariff of 1909 caused a significant split within the Republican Party. Midwestern insurgents opposed the high rates favored by Senator Nelson Aldrich and the party leadership, contributing to the party's division.

What was the impact of the Underwood Tariff of 1913?

The Underwood Tariff, championed by President Woodrow Wilson, significantly lowered tariff rates. Its economic impact was somewhat overshadowed by the outbreak of World War I shortly after its passage.

How did the federal income tax, established by the Sixteenth Amendment, affect the importance of tariffs?

The ratification of the Sixteenth Amendment in 1913 and the subsequent implementation of the federal income tax provided a new, substantial source of government revenue. This reduced the reliance on tariffs for funding federal operations, making them less significant in economic impact and political discourse.

What was the economic rationale behind the Reciprocal Tariff Act of 1934?

The Reciprocal Tariff Act of 1934 authorized the executive branch to negotiate bilateral tariff reduction agreements. The prevailing belief was that trade liberalization could stimulate economic growth, and the U.S. negotiated over 32 such agreements between 1934 and 1945.

What is the assessment of the Smoot-Hawley Tariff Act's role in the Great Depression?

While not the primary cause, the Smoot-Hawley Tariff Act of 1930 is considered to have contributed to the severity of the Great Depression. It raised average tariffs, provoked international retaliation, and led to a significant decline in global trade, worsening economic conditions.

What did economist Milton Friedman attribute as the main cause of the Great Depression, in contrast to the Smoot-Hawley Tariff?

Milton Friedman argued that while the Smoot-Hawley tariffs caused harm, the primary cause of the Great Depression was the Federal Reserve's insufficient action. He believed monetary policy failures were more significant than trade protectionism.

What is Paul Krugman's perspective on protectionism and recessions?

Paul Krugman suggests that protectionism does not necessarily cause recessions. He posits that while tariffs can decrease imports (an expansionary effect), this is offset by a decrease in exports, leading to a neutral effect on overall growth, and that trade barriers were more a response to the Depression than a cause.

How did the United States promote trade liberalization after World War II?

After World War II, the U.S. actively promoted the General Agreement on Tariffs and Trade (GATT), established in 1947, to minimize trade restrictions and liberalize trade among capitalist nations. This effort continued with the formation of the World Trade Organization (WTO) in 1995.

What challenges did American industries face after 1970, and how did they seek protection?

After 1970, American industries faced increased competition from low-cost global producers, leading to difficulties in sectors like steel, textiles, and automobiles. Industries like the auto sector sought protection through measures such as Voluntary Export Restraints (VERs) negotiated with countries like Japan.

What was the "chicken tax," and how did it originate?

The "chicken tax" was a 25% tariff imposed by President Lyndon B. Johnson in 1964 on imported light trucks, notably Volkswagen vans. It was a retaliatory measure against West Germany's tariffs on U.S. chicken imports, stemming from a dispute during the Kennedy administration.

What trade agreements were established in the late 1980s and early 1990s involving the U.S. and Canada/Mexico?

The Canada-U.S. Free Trade Agreement was established in 1987, which subsequently led to the North American Free Trade Agreement (NAFTA) in 1994, incorporating Mexico. These agreements aimed to enlarge the market for American firms by reducing trade barriers.

What was the stance of labor unions regarding free trade agreements like NAFTA and China's WTO entry?

Labor unions generally opposed free trade agreements such as NAFTA and China's entry into the WTO. They argued that these policies led to lower wages and job losses for American workers unable to compete with lower international labor costs.

How has public opinion on protectionism and free trade evolved since the early 2000s?

Public opinion on trade has fluctuated, often divided along partisan lines. While support for free trade agreements generally increased after 2016, specific views on whether trade helps individuals can vary significantly between Democrats and Republicans.

What factors influence public opinion on international trade and protectionism, according to scholars?

Scholars suggest that public opinion on international trade is highly susceptible to political framing due to the issue's complexity. Consequently, the public often relies on political elites within their own parties to form their opinions on trade matters.

What is the current status of tariffs in the United States?

Currently, only about 30% of imported goods are subject to tariffs in the United States, with the rest on a free list. The average tariffs charged by the U.S. are at a historic low, detailed in the Harmonized Tariff Schedule.

What was the primary motivation behind the Tariff Act of 1789, beyond revenue generation?

In addition to generating revenue, the Tariff Act of 1789 aimed to promote American manufacturing and foster independence from foreign nations, particularly for defense needs, by protecting nascent industries.

How did Samuel Slater contribute to the Industrial Revolution in the United States?

Samuel Slater, an immigrant familiar with British textile manufacturing, is credited with building the first operational textile manufacturing facility in the United States in Pawtucket, Rhode Island, in 1790, marking the beginning of the Industrial Revolution in the country.

What was the argument for higher tariffs made by manufacturers and factory workers in the late 19th century?

Manufacturers and factory workers argued for higher tariffs to protect their businesses and jobs from the lower wages and more efficient factories found in Britain and Europe. They believed protection was necessary to maintain American industrial competitiveness and living standards.

What was the economic impact of the Tariff of 1828, which was called the "Tariff of Abominations"?

The Tariff of 1828 imposed average import duties exceeding 25%, leading to intense political opposition, particularly from Southern states like South Carolina. They argued it unfairly harmed their economic interests by increasing the cost of imported goods.

How did the U.S. steel industry benefit from tariffs in the late 19th century?

Tariffs raised the price of imported steel, allowing American steel mills to charge higher prices domestically. This generated substantial profits, which were reinvested into expanding capacity and improving production methods, leading to a dramatic increase in U.S. steel output and quality.

What was the political impact of the Payne-Aldrich Tariff of 1909, beyond its economic effects?

The Payne-Aldrich Tariff of 1909 had a significant political impact by exacerbating the split within the Republican Party. Midwestern insurgents felt betrayed by the tariff's protection of Northeastern interests over agricultural ones, leading to a fatal division in the party by 1912.

What was the stated purpose of the "chicken tax" imposed in 1964?

The stated purpose of the "chicken tax" was to offset the dollar value of imported Volkswagen vans from West Germany with the lost sales of American chickens to Europe, stemming from a trade dispute over poultry imports.

How did Voluntary Export Restraints (VERs) inadvertently help Japanese auto companies?

By limiting the quantity of cars Japanese companies could export to the U.S., VERs encouraged them to focus on exporting higher-value, more expensive models. This strategy helped Japanese producers gain a stronger foothold in the mid- and large-size car markets, traditionally dominated by American manufacturers.

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Understanding Protectionism

Defining Protectionism

Protectionism in the United States refers to economic policies designed to restrain the import of foreign goods through measures such as tariffs, quotas, and subsidies. The primary objective is to foster domestic industries by making imported goods less competitive, thereby encouraging local production and consumption.

Historical Significance

This policy was particularly prevalent throughout the 19th century, serving as a cornerstone of American economic strategy during its industrial development. It often created significant political divides, notably between the manufacturing-oriented North and the agrarian, export-dependent South.

Evolution of Policy

While protectionism dominated much of American history, there was a notable shift towards trade liberalization following World War II, influenced by agreements like GATT. However, recent decades have seen a resurgence of protectionist sentiments and policies, reflecting evolving global economic dynamics.

A Historical Trajectory

Colonial Roots to Early Republic

During the colonial era, British mercantilist policies restricted colonial manufacturing. Post-independence, the Tariff Act of 1789 established federal revenue through tariffs, aiming to support nascent industries and national security, a vision championed by figures like Alexander Hamilton.

The 19th Century Divide

The 19th century was marked by intense debate between Northern industrial interests favoring high tariffs and Southern agricultural interests advocating for free trade. Policies like the "American System" and the tariffs of 1816, 1828 ("Tariff of Abominations"), and the Morrill Tariff during the Civil War shaped this era.

Industrialization and High Tariffs

Following the Civil War, high tariffs became a Republican Party staple, fueling industrial growth in the Northeast. Debates continued through the Gilded Age and Progressive Era, with legislation like the McKinley Tariff and the Payne-Aldrich Tariff reflecting these ongoing political and economic tensions.

The 20th Century: Depression and Liberalization

The Smoot-Hawley Tariff Act of 1930 exacerbated the Great Depression, leading to a significant reduction in global trade. Post-World War II, the U.S. championed trade liberalization through GATT, which evolved into the WTO, marking a period of generally lower tariffs.

Modern Resurgence

While free trade dominated post-war policy, recent decades have seen a renewed focus on protectionism. The election of Donald Trump signaled a shift, with increased tariffs and a focus on "economic nationalism," challenging the established global trade order.

Key Legislation and Concepts

Tariff of 1789

The foundational tariff act, establishing a 5% flat rate on imports. It served dual purposes: generating revenue for the new federal government and providing initial protection for nascent American industries against foreign competition.

The American System

Championed by Henry Clay, this 19th-century economic plan advocated for protective tariffs, a national bank, and internal improvements (infrastructure). It aimed to foster national economic self-sufficiency and industrial development.

Smoot-Hawley Tariff Act (1930)

This act significantly raised U.S. tariffs on over 20,000 imported goods. It is widely criticized for provoking retaliatory tariffs from other nations, worsening the Great Depression by drastically reducing international trade.

Reciprocal Tariff Act (1934)

Marking a shift from Smoot-Hawley, this act authorized the executive branch to negotiate bilateral tariff reduction agreements. It reflected a growing belief that trade liberalization could stimulate economic recovery and growth.

GATT and WTO

The General Agreement on Tariffs and Trade (GATT), established post-WWII and later evolving into the World Trade Organization (WTO), promoted multilateral trade liberalization, aiming to reduce tariffs and trade barriers globally.

Political Alignments and Debates

Party Stances

Historically, the Republican Party has largely favored protectionist policies to support domestic industry and labor, while the Democratic Party's stance has been more varied, often influenced by regional interests, with Southern Democrats typically advocating for lower tariffs.

Regional Interests

The North, with its burgeoning industrial base, generally supported high tariffs to protect its manufacturers from foreign competition. Conversely, the South, reliant on agricultural exports (like cotton) and importing manufactured goods, often opposed protectionist measures that increased their costs.

Influence of Interest Groups

Powerful lobbies representing industries such as iron, steel, and wool, along with labor unions, have historically influenced tariff legislation. Farmers' interests have also played a role, with debates often centering on whether agricultural producers benefited from or were harmed by protectionist policies.

Public Opinion and Economic Impact

Arguments for Protectionism

Proponents argue that protectionism stimulates domestic job creation, fosters industrial self-sufficiency, enhances national security by reducing reliance on foreign suppliers, and allows nascent industries to mature without facing overwhelming foreign competition.

Arguments Against Protectionism

Critics contend that protectionist policies lead to higher consumer prices, reduce consumer choice, invite retaliatory tariffs from trading partners, stifle innovation by reducing competition, and can ultimately harm overall economic growth.

Shifting Sentiments

Public opinion on protectionism has fluctuated, often influenced by economic conditions and political framing. While support for free trade agreements was dominant for decades, recent years have seen a notable increase in support for protectionist measures, particularly among certain political demographics.

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References

John W. Tyler, Smugglers and Patriots: Boston Merchants and the Advent of the American Revolution (1986) online review

Douglas A. Irwin, "The Aftermath of Hamilton's 'Report on Manufactures'", Journal of Economic History, Sept 2004, Vol. 64, Issue 3, pp. 800â821

Barbara M. Tucker, and Kenneth H. Tucker, Industrializing Antebellum America: The Rise of Manufacturing Entrepreneurs in the Early Republic (2008)

Scott C. James and David E. Lake, "The second face of hegemony: Britain's repeal of the Corn Laws and the American Walker Tariff of 1846", International Organization, Winter 1989, Vol. 43, Issue 1, pp. 1â28

Richard Hofstadter, "The Tariff Issue on the Eve of the Civil War", The American Historical Review (1938) 44#1 pp. 50â55 full text in JSTOR

Robert Gray Gunderson, Old Gentlemen's Convention: The Washington Peace Conference of 1861 (1961)

Mark Thornton and Robert B. Ekelund, Jr., Tariffs, Blockades, and Inflation: The Economics of the Civil War (2004)

Stanley Coben, "Northeastern Business and Radical Reconstruction: A Re-Examination." Mississippi Valley Historical Review (1959): 67â90. in JSTOR

Paul H. Tedesco, Patriotism, Protection, and Prosperity: James Moore Swank, the American Iron and Steel Association, and the Tariff, 1873â1913 (Garland, 1985.)

Joanne R. Reitano, The Tariff Question in the Gilded Age: The Great Debate of 1888 (Penn State Press, 1994)

David W. Detzer, "Businessmen, Reformers, and Tariff Revision: The Payne-Aldrich Tariff of 1909", Historian, (1973) 35#2 pp. 196â204, online

Harmonized Tariff Schedule [1] Accessed 12 Jul 2011

Tsang, J., "Towards a Brighter Future in Trade and World Development", Hong Kong Industrialist, 2005/12, p. 28

A full list of references for this article are available at the Protectionism in the United States Wikipedia page

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The American Economic Frontier

💡 Dive in with Flashcard Learning! 💡

Understanding Protectionism ⚖️

🛡️ Defining Protectionism

📈 Historical Significance

🔄 Evolution of Policy

A Historical Trajectory ⏳

📜 Colonial Roots to Early Republic

⚔️ The 19th Century Divide

🏭 Industrialization and High Tariffs

📉 The 20th Century: Depression and Liberalization

🌐 Modern Resurgence

Key Legislation and Concepts 📜

🏛️ Tariff of 1789

🇺🇸 The American System

💥 Smoot-Hawley Tariff Act (1930)

🤝 Reciprocal Tariff Act (1934)

🌍 GATT and WTO

Political Alignments and Debates 🏛️

⚖️ Party Stances

📍 Regional Interests

👥 Influence of Interest Groups

Public Opinion and Economic Impact 🗣️

💰 Arguments for Protectionism

💸 Arguments Against Protectionism

📊 Shifting Sentiments

Teacher's Corner 🧑‍🏫

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References

📜 References

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Disclaimer ⚠️

📜 Important Notice

Dive in with Flashcard Learning!

Understanding Protectionism

Defining Protectionism

Historical Significance

Evolution of Policy

A Historical Trajectory

Colonial Roots to Early Republic

The 19th Century Divide

Industrialization and High Tariffs

The 20th Century: Depression and Liberalization

Modern Resurgence

Key Legislation and Concepts

Tariff of 1789

The American System

Smoot-Hawley Tariff Act (1930)

Reciprocal Tariff Act (1934)

GATT and WTO

Political Alignments and Debates

Party Stances

Regional Interests

Influence of Interest Groups

Public Opinion and Economic Impact

Arguments for Protectionism

Arguments Against Protectionism

Shifting Sentiments

Teacher's Corner

True or False?

Test Your Knowledge!

Gamer's Corner

Discover other topics to study!

References

Feedback & Support

Disclaimer

Important Notice