Working Paper: NBER ID: w26256
Authors: Douglas A. Irwin
Abstract: This survey reviews the broad changes in U.S. 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. These three objectives – revenue, restriction, and reciprocity – accord with three consecutive periods in history when one of them was predominant. The political economy of these tariffs has been driven by the interaction between political and economic geography, namely, the location of trade-related economic interests in different regions and the political power of those regions in Congress. The paper also addresses the impact of trade policies on the U.S. economy, such as the welfare costs of tariffs, the role of protectionism in fostering American industrialization, and the relationship between the Smoot-Hawley tariff and the Great Depression of the 1930s.
Keywords: US trade policy; historical perspective; tariffs; political economy
JEL Codes: F13; N71; N72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Import tariffs (F19) | Revenue generation (H27) |
| Import tariffs (F19) | Protecting domestic producers (D18) |
| Import tariffs (F19) | Reciprocity in trade agreements (F13) |
| Political and economic geography (R12) | Tariff levels (F14) |
| Political and economic geography (R12) | Trade agreements (F13) |
| Smoot-Hawley Tariff of 1930 (N12) | Onset of the Great Depression (N13) |
| Smoot-Hawley Tariff of 1930 (N12) | Retaliatory trade measures (F13) |