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Tariffs in the United States

Tariffs in the United States

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Published by Tony Hue
important tariffs to study for the AP U.S. History test.

Visit my website at loneplacebo.com for more
important tariffs to study for the AP U.S. History test.

Visit my website at loneplacebo.com for more

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Published by: Tony Hue on Sep 21, 2008
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Tariffs in the United States
The Hamilton Tariff of 1789
(enacted 1789-07-04) was the second statute ever enacted by the new UnitedStates government. The new Constitution allowed only the federal government to levy tariffs, so the oldsystem of state rates disappeared. Most of the rates of the tariff were between 5 and 10 percent, depending onthe value of the item. As Secretary of the Treasury, Alexander Hamilton was anxious to establish the tariff asa regular source of revenue for the government and as a protection of domestic manufacture. The former wasof immediate necessity; the latter was not. Instead, it established the principle of protectionism that was to become a persistent political dispute throughout the next century and a half.
The Tariff of 1816
was put in place after the War of 1812. Britain had developed a large stockpile of ironand textile goods. Because this stockpile was so large, the price of British goods soon plummeted incomparison to that of American goods. Consequently, many Americans bought British goods rather thanAmerican goods, hurting American manufacturers. James Madison and Henry Clay devised a plan to helpAmerican producers, called the American System. It included a protective tariff more commonly known asthe Tariff of 1816, which increased the price of British goods so that American goods could compete withthem. The northern United States were quite pleased by this tariff. Since the north's economy was based onmanufacturing, many of its industries and workers competed with British imports and benefited from thetariff. The Southerners, however, were outraged, since they were net consumers of the manufactured goodswhich now cost more; further their agricultural exports to Britain might be threatened if Britain retaliated.The tariff was popular in areas such as Pennsylvania and New York where manufacturing industrywas growing rapidly. It was supported widely in those states to defend American manufacturers againstcompetition from UK manufacturers. It was also popular in the West in states such as Kentucky, Clay's homestate, where it was hoped to develop hemp and flax as crops and who wanted new tariffs to support theseinfant industries. The proposal was less popular with New England merchants who were hoping to restoretrade with the UK and other European powers and import products from Europe in return for US exportssuch as cotton. It was also less popular in the South as it would increase the costs of production of their export crops notably cotton. It was also opposed by people who saw it as raising the costs of living of the poor. However, the tariff was supported by notable Southern leaders such as President Madison and former  president Thomas Jefferson. Notably, John C. Calhoun who would be a strong opponent of future tariff regimes supported the Dallas tariff in the Congress.
The Tariff of 1824
(enacted 1824-01-07) was a protective tariff in the United States designed to protectAmerican industry in the face of cheaper British commodities, especially iron products, wool and cottontextiles, and agricultural goods. The second protective tariff of the 19th century, the Tariff of 1824 was thefirst in which the sectional interests of the North and the South truly came into conflict. The Tariff of 1816eight years before had passed into law upon a wave of nationalism that followed the War of 1812. But by1824, this nationalism was transforming into strong sectionalism. Henry Clay advocated his three-point"American System", a philosophy that was responsible for the Tariff of 1816, the Second Bank of the UnitedStates, and a number of internal improvements. John C. Calhoun embodied the Southern position, havingonce favored Clay's tariffs and roads, but by 1824 opposed to both. He saw the protective tariff as a devicethat benefited the North at the expense of the South, which relied on foreign manufactured goods and openforeign markets for its cotton. And a program of turnpikes built at federal expense, which Clay advocated,would burden the South with taxes without bringing it substantial benefits. Nonetheless, Northern andWestern representatives, whose constituencies produced largely for the domestic market and were thusmostly immune to the effects of a protective tariff, joined together to pass the tariff through Congress,
 
 beginning the tradition of antagonism between the Southern States and the Northern States that wouldultimately help produce the American Civil War.
The Tariff of 1828
, also known as the Tariff of Abominations, enacted on May 19, 1828 was a protectivetariff passed by the U.S. Congress. It was labeled the "Tariff of Abominations" by its Southern detractors because of the effects it had on the Antebellum Southern economy. It was the highest tariff in U.S. peacetimehistory, enacting a 62% tax on 92% of all imported goods.The goal of the tariff was to protect industry in the northern United States from competing Europeangoods by increasing the prices of European products. The reaction in the South, particularly in SouthCarolina, would lead to the Nullification Crisis that began in late 1832.Opponents generally felt that the protective features of tariffs were harmful to agrarian interests andwere unconstitutional because they favored one sector of the economy over another. Proponents found noconstitutional restriction on the purposes for which tariffs could be enacted. They argued that strengtheningthe industrial capacity of the nation was in the interest of the entire country.Faced with a reduced market for goods and pressured by British abolitionists, the British reducedtheir imports of cotton from the United States, which hurt the South. The tariff forced the South to buymanufactured goods from U.S. manufacturers, mainly in the North, at a higher price, while Southern statesalso faced a reduced income from sales of raw materials.
The Tariff of 1832
was a protectionist tariff in the United States. It was passed as a reduced tariff to remedythe conflict created by the tariff of 1828, but it was still deemed unsatisfactory by southerners and other groups hurt by high tariff rates. Southern opposition to this tariff and its predecessor, the Tariff of Abominations, caused the Nullification Crisis involving South Carolina. The tariff was later lowered down to35 percent, a reduction of 10 percent, to pacify these objections.
The Tariff of 1833
(also known as the Compromise Tariff of 1833) was proposed by Henry Clay and JohnC. Calhoun as a resolution to the Nullification Crisis. It was adopted to gradually reduce the rates after southerners objected to the protectionism found in the Tariff of 1832 and the 1828 Tariff of Abominations,which had prompted South Carolina to threaten secession from the Union. This Act stipulated that importtaxes would gradually be cut over the next decade until, by 1842, they matched the levels set in the Tariff of 1816--an average of 20%. The compromise reductions lasted only two months into their final stage before protectionism was reinstated by the Black Tariff of 1842.
The Tariff of 1842
, or Black Tariff as it became known, was a protectionist tariff schedule adopted in theUnited States to reverse the effects of the Compromise Tariff of 1833. The Compromise Tariff contained a provision that successively lowered the tariff rates from their level under the Tariff of 1832 over a period of ten years until the majority of dutiable goods were to be taxed at 20%. As the 20% level approached in 1842,industrial interests and members of the Whig Party began clamoring for protection, claiming that thereductions left them vulnerable to European competition. The bill restored protection and raised averagetariff rates to almost 40%.The bill stipulated sweeping changes to the tariff schedule and collection system, most of which weredesigned to augment its protective character. The law replaced most ad valorem rates with specific dutiesassessed on a good-by-good basis. It also repealed the credit system of tariff finance and replaced it with acash payment system, collected at portside customs houses.The Black Tariff was signed into law somewhat reluctantly by President John Tyler following a year of disputes with the Whig leaders in Congress over the restoration of national banking and the government's
 
land disbursement policies. For the previous year, Whig leaders in Congress had sent bills to Tyler couplingthe tariff hike with a public land disbursement package insisted upon by Henry Clay, prompting a presidential veto.In the summer of 1842 representatives from the northeastern manufacturing states began feelingelectoral pressures for a tariff hike before the elections that fall and abandoned Clay's land disbursement program. The resulting bill contained the tariff hike alone that satisfied the manufacturers and was acceptableto Tyler since it lacked the land disbursement provisions. The main beneficiary industry to receive protectionunder the tariff was iron. Import taxes on iron goods, both raw and manufactured, amounted to almost twothirds of their price overall and exceeded 100% on many items such as nails and hoop iron. The law alsoraised the percentage of dutiable goods from just over 50% of all imports to over 85% of all imports.The impact of the 1842 tariff was felt almost immediately through a sharp decline in internationaltrade in 1843. Imports into the United States nearly halved from their 1842 levels and exports, which areaffected by overall trade patterns, dropped by approximately 20%.The Tariff of 1842 was repealed in 1846 when it was replaced by the Walker Tariff. The Whigs' lossof Congress and the presidency in 1844 facilitated a Democratic-led effort to reduce the rates again.Concerns that the Black Tariff's high rates would suppress future trade and customs revenue with it fueledthe movement to repeal the act.The
1846 Walker tariff 
was a Democratic bill that reversed the high rates of tariffs imposed by the Whig- backed "Black Tariff" of 1842 under president John Tyler. It was one of the lowest tariffs in American historyand primarily supported by Southern Democrats who had little industry in their districts.In 1846 Polk delivered his tariff proposal, designed by Walker, to Congress. Walker urged itsadoption in order to increase commerce between the United States and Britain. He also predicted that areduction in overall tariff rates would stimulate overall trade, and with it imports. The result, asserted Walker,would be a net increase in tax revenue despite a reduction in the rates.The Democratic-controlled Congress quickly acted on Walker's recommendations. The Walker Tariff  bill produced the nation's first standardized tariff by categorizing goods into distinct schedules at identifiedad valorem rates rather than assigning individual taxes to imports on a case-by-case basis.The bill resulted in a moderate reduction in many tariff rates and was considered a success in that itstimulated trade and brought needed revenue into the U.S. Treasury, as well as improved relations withBritain that had soured over the Oregon boundary dispute. As Walker predicted, the new tariff stimulatedrevenue intake from $30 million annually under the Black Tariff in 1845 to almost $45 million annually by1850. Exports to and imports from Britain rose rapidly in 1847 as both countries lowered their tariff barriersagainst each other.It was passed along with a series of financial reforms proposed by Walker including the WarehousingAct of 1846. The 1846 tariff rates initiated a fourteen-year period of relative free trade by nineteenth centurystandards lasting until the high Morrill Tariff signed by James Buchanan in March 1861.
The Tariff of 1857
was a major tax reduction in the United States, creating a mid-century lowpoint for tariffs. It amended the Walker Tariff of 1846 by lowering rates to around 17% on average. The bill wasoffered in response to a federal budget surplus in the mid 1850s. It was intended to disperse this surplusthrough a tax cut.Supporters of the bill came mostly from Southern and agricultural states, which tended to be exportdependent and tended to support the "free trade" position. They were also joined by a handful of NewEngland wool manufacturers. This constituency traditionally supported protectionism in the 19th century. Aseries of political setbacks for the protectionist movement in the early 1850s, however, prompted them to

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