Protectionism in the United States

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.

Hamilton explained 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".

According to Michael Lind, protectionism was America's de facto policy from the passage of the Tariff of 1816 to World War II, "switching to free trade only in 1945".

A stark reduction in international trade and retaliatory actions from Canada, Britain, Germany and other industrial nations exacerbated the devastating effects of the Great Depression on the American population.

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.

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.

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.

[16] The high protectionism tariffs Hamilton originally called for were not adopted until 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.

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 for a time from more efficient British producers.

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.

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.

[42] 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.

[48] 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.

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.

Reduced trade and, especially, the new revenues generated by the federal income tax (bolstered by the ratification of the Sixteenth Amendment in 1913) made tariffs much less important in terms of economic impact and political rhetoric.

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.

[63] Nobel laureate Maurice Allais, thinks that tariff was rather helpful in the face of deregulation of competition in the global labor market and excessively loose credit prior to the Crash which, according to him, caused the crisis Financial and banking sectors.

By limiting the number of automobiles that could be imported into the USA from Japan, quotas inadvertently helped Japanese companies push into larger, and more expensive market segments.

[67] Under the Eisenhower, Kennedy, Johnson and Nixon administrations, increasing numbers of Voluntary Export Restraint agreements were also secured with Japan, South Korea, Taiwan, Hong Kong and European countries to avert the application of trade barriers by the US.

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.

[69] 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.

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.

[67] Nevertheless, John Tsang, then Hong Kong's Secretary for Commerce, Industry and Technology and chair of the Sixth Ministerial Conference of the World Trade Organization, MC6, noted in 2005 that the US spent US$20 billion per year on "trade-distorting support".

However, experimental studies find that support for protectionism is not sufficiently, or even necessarily, related to an individual's economic circumstances, but instead is deeply rooted in domestic politics.

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[76]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.

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.

Henry Clay's longtime rival and political opponent, President Andrew Jackson, in explaining his support for a tariff, wrote: We have been too long subject to the policy of the British merchants.

"[85]"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.