History of tariffs in the United States

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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 imports with domestic production) by acting as a protective barrier around infant industries.[1] 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.[2]

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. After 1942, the U.S. began to promote worldwide free trade. After the 2016 presidential election, the US increased trade protectionism.[2]

According to Dartmouth economist Douglas Irwin, tariffs have served 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."[3] From 1790 to 1860, average tariffs increased from 20 percent to 60 percent before declining again to 20 percent.[3] 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.[3]

  1. ^ Kennedy, David M.; Cohen, Lizabeth; Piehl, Mel (2017). The Brief American Pageant: A History of the Republic, Volume I: To 1877 (9th ed.). Boston, Massachusetts: Cengage Learning. p. 143. ISBN 978-1285193304.
  2. ^ a b Hayashi, Yuka (December 28, 2023). "Biden Struggles to Push Trade Deals with Allies as Election Approaches". The Wall Street Journal. Archived from the original on December 28, 2023. Retrieved January 6, 2024.
  3. ^ a b c Irwin, Douglas A. (August 2, 2020). "Trade Policy in American Economic History". Annual Review of Economics. 12 (1): 23–44. doi:10.1146/annurev-economics-070119-024409. ISSN 1941-1383. Archived from the original on April 15, 2021. Retrieved August 7, 2020.