Homeworks academic service


The past and present of the import and trade industry

Trade Policy Douglas A. It was not always that way. For most of U. For the past several years, I have been investigating the historical aspects of U.

  • South Carolina's refusal to enforce the existing high tariffs sparked the nullification crisis and paved the way for the Compromise Tariff of 1833, which phased out tariffs above 20 percent over a nine year period;
  • One paper investigates the multiple channels by which tariffs could have promoted growth during this period;
  • But disappointed domestic manufacturers shift ed their political allegiance to the Republican Party, led by Thomas Jefferson and James Madison, both of whom were willing to consider much more draconian trade policies aimed at Britain.

The purpose of this research has been to study the economic effects of past trade policies on the U. To fill the gap in the historical data, I gathered information from early government documents to calculate the average tariff on total and dutiable imports for the period from 1790 to 1820. Because re-exports were a significant component of U.

One of the classic, early statements on U. This report called for government support of manufacturing through subsidies and import tariffs, but it is commonly believed that the report was never implemented. Although Hamilton's proposals for bounties subsidies failed to receive support, my research has shown that Congress adopted virtually every tariff recommendation put forward in the report by early 1792.

  1. Through comparisons, this paper calculates the trade competitiveness index and relative competitive advantages of regions and investigates the impact of Chinese textiles on UK imports from three key free trade regions across the textile sectors in the period 1990—2016 on the basis of United Nation Comtrade Rev.
  2. Interestingly, Vietnam is well on its way to becoming a key location for high-technology manufacturing, with companies like Samsung, LG Electronics, Nokia, and Intel making multi-billion dollar investments into the country. Indeed, as president, Jefferson was responsible for one of the most unusual policy experiments in the history of U.
  3. Tariff critics charged that those import duties raised the cost of living for consumers and harmed agricultural producers by effectively taxing their exports, thus redistributing income from consumers and farmers to big businesses in the North. Cross-country analysis is an alternative way of examining the U.

Indeed, because his policy toward manufacturing was one of limited encouragement and not protection, Hamilton was not as much of a protectionist as he is often made out to be. Hamilton's moderate tariff policies found support among merchants and traders, the backbone of the Federalist Party. But disappointed domestic manufacturers shift ed their political allegiance to the Republican Party, led by Thomas Jefferson and James Madison, both of whom were willing to consider much more draconian trade policies aimed at Britain.

Indeed, as president, Jefferson was responsible for one of the most unusual policy experiments in the history of U. At his request, Congress imposed a nearly complete embargo on international commerce from December 1807 to March 1809.

The Jeffersonian trade embargo provides a rare opportunity or natural experiment to observe the effects of a nearly complete albeit short-lived elimination of international trade.

Economists usually describe the gains from international trade by comparing welfare at a free-trade equilibrium with welfare at an autarky equilibrium. In practice, such a comparison is almost never feasible because the autarky equilibrium is almost never observed, except in unique cases such as this one.

By mid-1808, the United States was about as close to being fully shut off from international commerce as it has ever been during peacetime. Monthly price data allow us to observe the dramatic impact of the embargo: According to my calculations, the static welfare cost of the embargo was about 5 percent of GDP.

The embargo, along with the dramatic reduction in trade as a result of the War of 1812, is commonly believed to have spurred early U. Joseph Davis and I used his newly available series on U. However, the disruptions may have had a permanent effect in reallocating resources between domestic infant industries such as cotton textiles and trade-dependent industries such as shipbuilding.

Antebellum Trade Policy During the 1820s, the average tariff on dutiable imports rose sharply, peaking at over 60 percent in 1830, even higher than under the notorious Hawley-Smoot tariff of 1930. Over the next decade, the average tariff fell by half, and stood at less than 20 percent by the Civil War. In fact, the period from 1830 to 1860 was one of just two in American history when tariffs exhibited a secular decline the other being from the mid-1930s to the present. What political economy factors explain the rise and fall of tariffs during this period?

A shift in the economic interests of the West the Midwest of today appears to explain this pattern.

An Introduction to Vietnam’s Import & Export Industries

In the 1820s, a coalition in Congress between the North and West raised tariffs by exchanging votes on import duties for spending on internal improvements, which benefited the West.

But when President Andrew Jackson began vetoing internal improvements bills, he effectively de-linked these issues and destroyed the North-West alliance. South Carolina's refusal to enforce the existing high tariffs sparked the nullification crisis and paved the way for the Compromise Tariff of 1833, which phased out tariffs above 20 percent over a nine year period. Although Congress could not credibly commit to implementing the staged reductions or maintaining the lower duties, the Compromise held because of the growing economic interest of the West in e xporting grains due, ironically, to transportation improvements as the railroad network expanded which gave it a stake in maintaining a lower tariff equilibrium in cooperation with the South.

Aside from revenue, the ostensible purpose of such import tariffs was to protect import-competing manufacturers from foreign competition. The role of the tariff in promoting the expansion of the early American cotton textile industry has the past and present of the import and trade industry quite controversial, with older scholarship by Frank Taussig suggesting that the industry was well established by the 1830s and more recent work suggesting that the tariff remained critical for some time.

In joint work, Peter Temin and I concluded that Taussig was correct in that the cotton textile industry could survive without the tariff by the early 1830s.

The lack of responsiveness of domestic production to changes in import prices was mainly due to the specialization of American and British producers in dif ferent types of textile products that were imperfect substitutes for one another: In terms of exports, the United States produced about 80 percent of the world's cotton in the decades prior to the Civil War, most of which was exported.

A long-standing question has been the degree to which the United States had market power in cotton and how much it could have gained from an optimal export tax on cotton. To address this question, I estimated the elasticity of foreign demand for U. Such a tax was not implemented, however, partly because the U. Constitution forbids the imposition of export taxes.

One implication is that the welfare g ains from an export tax are not necessarily large, even for a country with considerable market power. Tariff advocates claimed that high import duties helped to expand industrial employment and keep wages high, while also aiding farmers by creating a steady demand in the home market for the food and raw materials that they produced.

  • It was not always that way;
  • The act also contained an unusual provision in which the tariff would be completely eliminated in six years if, by that time, domestic production did not amount to at least one-third of imports;
  • The tariff succeeded in promoting domestic production and output rapidly expanded, and by about 1910 the price of U.

Tariff critics charged that those import duties raised the cost of living for consumers and harmed agricultural producers by effectively taxing their exports, thus redistributing income from consumers and farmers to big businesses in the North.

One approach to examining the magnitude of protection given to import-competing producers and the costs imposed on export-oriented producers is to focus on changes in the domestic prices of traded goods relative to non-traded goods. The paper also indicates that the tariff policy redistributed large amounts of income about 9 percent of GDP across groups, although the impact on consumers was roughly neutral because they devoted a sizeable share of their expenditures to exportable goods.

These findings may explain why import-competing producers pressed for even greater protection in the face of already high tariffs and why con sumers as voters did not strongly oppose the policy.

Were protectionist policies essential for domestic industries after the Civil War? In the case of pig the past and present of the import and trade industry, high import tariffs may have helped those producers, but they harmed other manufacturers who needed access to cheap iron to produce other products, such as machinery and bridges.

I examined the case that has been heralded as possibly the best example of infant industry protection: Left without adequate protection, there was virtually no domestic production prior to 1890. The McKinley tariff of 1890 su bstantially raised the duty on imported tinplate to encourage the entry and growth of domestic producers.

The act also contained an unusual provision in which the tariff would be completely eliminated in six years if, by that time, domestic production did not amount to at least one-third of imports. The tariff succeeded in promoting domestic production and output rapidly expanded, and by about 1910 the price of U. The tinplate example has all the elements of an apparently successful application of infant industry protection.

But in asking the counterfactual question - would the industry have developed anyway, and were the tariffs worthwhile? My analysis suggests that tinplate was not an "infant industry" that floundered because of the lack of previous production experience learning by doingbut rather an industry in which domestic production was not profitable because of the high domestic cost of iron and steel inputs attributable to tariffs.

Working Papers & Publications

The tinplate industry suffered from negative effective protection due to the existing tariff structure; while a second-best optimal tariff could the past and present of the import and trade industry corrected that distortion, and improved welfare, such an optimum was not imposed.

In the absence of the McKinley tariff, the U. Over this time horizon, the McKinley duty fails to pass a cost-benefit test. Were high import tariffs somehow related to the strong U.

One paper investigates the multiple channels by which tariffs could have promoted growth during this period. For most of the century, the United States had a strong comparative advantage in agricultural goods and exported mainly raw cotton, grains, and meat products in exchange for imports of manufactured goods.

But in the mid-1890s, America's exports of manufactures began to surge. Manufactured goods jumped from 20 percent of U. In about two decades, the United States reversed a century-old trade pattern and became a large net exporter of manufactured goods.

What accounts for this abrupt change in the structure of U. My research suggests that natural resource abundance fueled a dramatic expansion of iron and steel exports, in part by enabling a sharp reduction in the price of U. The non-tradability of American ore resulted in its distinctive impact on the pattern of U. Irwin, "Historical Perspectives on U. Irwin, "The Welfare Costs of Autarky: Irwin, "Antebellum Tariff Politics: Irwin, "Could the U.

Tariffs Promote Infant Industries? I am currently studying the role of tariffs in promoting structural change during this period. Cross-country analysis is an alternative way of examining the U.