Trade Policy in American Economic History

Abstract

This article reviews the broad changes in US trade policy over the course of the nation's history. Import tariffs have been the main instrument of trade policy and have had three main 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. Each of these three objectives—revenue, restriction, and reciprocity—was predominant in one of three consecutive periods in history. The political economy of these tariffs has been driven by the location of trade-related economic interests in different regions and the political power of those regions in Congress. The review also addresses the impact of trade policies on the US economy, such as the welfare costs of tariffs, the role of protectionism in fostering US industrialization, and the relationship between the Smoot–Hawley Tariff Act and the Great Depression of the 1930s.