A Short History of U.S. Tariffs

     "Give us a protective tariff, and we shall have the greatest nation on earth."
          - Abraham Lincoln, 1847

We learned in high school how the American Revolution reflected the colonists’ resentment of British taxes. I didn’t know until recently that they also resented Britain’s refusal to let the colonies tax imports. No sooner was the Constitution ratified than Congress enacted a tariff. Despite occasional controversy, import duties remained a mainstay of American policy from 1789 until the end of World War II.

Tariff revenues provided funds to run the federal government. With America lagging far behind England in manufactures, tariffs protected a program of rapid industrial catch-up. The War of 1812 showed vulnerability to a naval blockade, making it a matter of national security to reduce dependence on imports.

Second only to slavery, tariffs were the great controversy leading up to the Civil War. Whigs and Republicans enacted high protective tariffs, which benefited Northern industry. Democrats argued for free trade, to promote export of cotton and other raw materials. The pro-tariff forces dominated. Between 1861 and 1933, U.S. import duties on manufactures reached 50 percent, among the highest in the world.

Only after World War II did American economists and policy makers begin to favor reciprocal free trade. The old motives for tariffs had changed. After 1913, when the 16th Amendment allowed federal income taxes, tariffs ceased to be essential for revenue. American industry had caught up and surpassed the rest of the world. Airplanes and other technology made a successful naval blockade less likely.

Do the advantages of import duties still justify the resulting price increases? It's up for debate.

Image: British cartoon shows Americans and others using protectionism to win out over British free trade.