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Today's Tariff Policy Is Risky—But Hardly Unique in US History

For fans of 1980s pop culture, any mention of the history of tariffs brings to mind the film “Ferris Bueller’s Day Off,” in which a droning high school teacher played by Ben Stein asks Ferris and his bored classmates whether the Smoot-Hawley Tariff “raised or lowered” tariffs. “Anyone? Anyone?” he famously intones.

Interest in tariff history has spiked in recent months following the Trump administration’s new and proposed tariffs on steel, aluminum, and consumer goods. Critics of the tariffs point to Smoot-Hawley—which drastically raised tariffs on goods imported into the United States and is widely blamed for plunging the nation deeper into the Great Depression—as a cautionary tale.

However, critical differences between the 1930 law and today’s tariff hikes obscure the historical context of today’s debate. Moreover, tariffs have been central to US economic policy for much of the nation’s history, with the past two decades of bipartisan support for low tariffs (an era now over) being a notable exception. Several episodes in this broader history offer useful lessons for today’s policymakers.

Americans harbored strong feelings about tariffs even before the dawn of the republic. In the 1760s, increased import duties on glass, paper, lead, and, famously, tea exacerbated tensions between colonists and the British, leading to the American Revolution. And throughout the early years of the republic, trade issues remained at the fore, often intertwined with diplomatic tensions.

It is the battle over tariffs that unfolded during Andrew Jackson’s presidency, however, that truly underscored the volatility of the trade issue — and its potential for stirring political realignments.

With then-candidate Jackson’s support strongest in the South and the West leading up to the election of 1828, a fellow Democrat and supporter in Congress proposed a tariff favorable to New England economic interests, hoping it would boost Jackson’s appeal there. But the bill (signed into law by Jackson’s predecessor, John Quincy Adams, shortly before Jackson took office) provoked a backlash from Jackson’s southern base. Opponents — led by Jackson’s own vice president, South Carolinian John C. Calhoun — dubbed it the “tariff of abominations” because it threatened the market for southern cotton abroad. Calhoun and his allies also fretted that the tariff might pave the way for future regulation by antislavery legislators.

Opposition to the tariff led to the so-called nullification crisis during Jackson’s presidency: Calhoun and his allies in South Carolina argued that the state could “nullify” federal laws it opposed, like the tariff, leading Jackson to threaten military action in response. Though compromise eventually defused the controversy, it foreshadowed the tensions that would ignite the Civil War.

Just as importantly, it helped trigger a major realignment of US political parties. As Calhoun resigned the vice presidency over the tariff and nullification issues, anti-Jackson forces coalesced around the new Whig Party. Jackson’s southern support remained fractured, with alienated southerners forming the Whigs’ southern wing.

Fast forward to the late nineteenth century and tariffs remained central to US politics. Despite depictions of this period, dubbed the Gilded Age, as one of freewheeling laissez-faire economic policy, tariffs—and support for tariffs—remained high. During Republican William McKinley’s time as a congressman, they became one of his signature issues, and this remained the case during his successful campaign for the presidency in 1896.

However, as Robert Merry notes in a new biography, McKinley’s support for protectionism gradually softened during his presidency as he came to recognize that continued US economic growth would require access to more foreign markets, which in turn would require mutual dismantling of trade barriers. In 1901 — just a day before his assassination — he delivered a speech outlining this concept of “reciprocity,” arguing that the “period of exclusiveness is past. ... Commercial wars are unprofitable. A policy of good will and friendly trade relations will prevent reprisals.”

Though McKinley’s death deferred this vision, Democratic presidents Woodrow Wilson and Franklin D. Roosevelt would later take up the concept of reciprocity, paving the way for the post-World War II era of relatively free trade and low tariffs.

In the meantime, of course, came the infamous Smoot-Hawley tariff. Initially aimed at supporting farmers by imposing import tariffs on agricultural goods, the bill expanded as lawmakers added more and more goods to the list, trying to boost the economic interests of their own districts. The final law raised duties on nearly 20,000 imported goods, with tariffs adding up to almost 60 percent of dutiable imports, the highest level since 1830. Soon after it passed, the Great Depression—triggered by the 1929 stock market crash—worsened.

In the postwar era of free trade, it was largely Democrats who supported raising tariffs, mostly in response to calls from labor unions to protect workers from foreign competition. By the 1990s, however, a bipartisan consensus in favor of low tariffs had emerged — one that continued for the next two decades, until Donald Trump’s run for president.

What might we learn from some of these episodes?

For one thing, while Smoot-Hawley demonstrates the potential negative economic impacts of tariffs, it is also worth noting that today’s rates are much lower (around five percent of dutiable imports) than they were before the 1930 law took effect. Trump’s proposed hikes on steel, aluminum, and other goods won’t raise that number to anywhere near Smoot-Hawley levels. The real risk—one that becomes increasingly real as trade tensions heat up—is that the tariffs will spark trade wars with China and other foreign powers and threaten relationships with allies like Canada and the EU.

Meanwhile, the story of Jackson and the tariff of abominations highlights the potential for a shift in coalitions and even a backlash from Trump’s base in today’s measures. Issues of tariffs and trade are already splitting Republican lawmakers, with the traditionally free trade wing of the GOP opposing the White House’s measures. Meanwhile, China’s retaliation against the tariffs, which includes duties on products like soybeans, has already hit farmers in heavily pro-Trump communities. Just as Southerners deserted Jackson after their cotton interests were threatened, these Midwesterners may also rebel against Trump over threats to their livelihoods.

What does all of this suggest about the way forward? As many economists have noted, the White House’s original tariffs were a response to valid concerns, such as Chinese theft of intellectual property. Yet there is no guarantee that US tariffs alone can force a resolution of those concerns. McKinley’s concept of reciprocity, then, would seem to offer an answer. By negotiating mutually lower trade barriers with other governments, the US might cultivate the goodwill (and economic coalition) that it can use to put multinational pressure on China and avoid a dangerous trade war.

History rarely offers exact one-to-one parallels with today, but it does suggest echoes and ideas. It’s a lesson that Ferris Bueller — and the White House — would do well to heed.

Arielle Gorin, a Saybrook consultant, is currently working on a study of a leading national nonprofit.


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