Editing Tariff (section)

===United States===
{{See also|History of tariffs in the United States|Protectionism in the United States}}
[[File:Average tariff rates (France, UK, US).png|thumb|Average tariff rates (France, UK, US){{Update needed|date=November 2024}}]]
[[File:Average Tariff Rates in USA (1821-2016).png|thumb|Average tariff rates in US (1821–2016){{Update needed|date=November 2024}}]]

Before the [[Constitution of the United States|new Constitution]] took effect in 1789, the Congress could not levy taxes{{snd}}it sold land or begged money from the states. The new national government needed revenue and decided to depend upon a tax on imports with the [[Tariff of 1789]].<ref>John C. Miller, ''The Federalist Era: 1789–1801'' (1960), pp. 14–15,</ref> The policy of the U.S. before 1860 was low tariffs "for revenue only" (since duties continued to fund the national government).<ref>Percy Ashley, ''Modern Tariff History: Germany, United States, France'' (3rd ed. 1920) pp. 133–265.</ref>

The [[Embargo Act of 1807]] was passed by the U.S. Congress in that year in response to European interference with American merchant shipping. While not a tariff per se, the Act prohibited the import of all kinds of manufactured imports, resulting in a huge drop in US trade and protests from all regions of the country. However, the embargo also had the effect of launching new, emerging US domestic industries across the board, particularly the textile industry, and marked the beginning of the manufacturing system in the United States.<ref>Smith, Ryan P., "A History of America's Ever-Shifting Stance on Tariffs: Unpacking a debate as old as the United States itself", ''Smithsonian Magazine'', 18 April 2018, retrieved 5 April 2023</ref>

An attempt at imposing a high tariff occurred in 1828, but the South denounced it as a "[[Tariff of Abominations]]" and it almost caused a rebellion in South Carolina until it was lowered.<ref>Robert V. Remini, "Martin Van Buren and the Tariff of Abominations." ''American Historical Review'' 63.4 (1958): 903–917.</ref>

Between 1816 and the end of the Second World War, the United States had one of the highest average tariff rates on manufactured imports in the world. According to Paul Bairoch, the United States was "the homeland and bastion of modern protectionism" during this period.<ref name=Chang1>{{cite web |url=http://www.ips-dc.org/kicking_away_the_ladder_the_real_history_of_free_trade/ |title=Kicking Away the Ladder: The 'Real' History of Free Trade |last1=Chang |first1=Ha-Joon |last2=Gershman |first2=John |publisher=Institute for Policy Studies |access-date=1 September 2017 |date=2003-12-30 |archive-date=2017-09-02 |archive-url=https://web.archive.org/web/20170902002011/http://www.ips-dc.org/kicking_away_the_ladder_the_real_history_of_free_trade/ |url-status=live}}</ref>

Many American intellectuals and politicians during the country's catching-up period felt that the free trade theory advocated by British classical economists was not suited to their country. They argued that the country should develop manufacturing industries and use government protection and subsidies for this purpose, as Britain had done before them. Many of the American economists of the time, until the last quarter of the 19th century, were strong advocates of industrial protection: [[Daniel Raymond]] who influenced [[Friedrich List]], [[Mathew Carey]] and his son Henry, who was one of Lincoln's economic advisers. The intellectual leader of this movement was [[Alexander Hamilton]], the first Secretary of the Treasury of the United States (1789–1795). The United States rejected [[David Ricardo]]'s [[theory of comparative advantage]] and protected its industry. The country pursued a protectionist policy from the beginning of the 19th century until the middle of the 20th century, after the Second World War.<ref name=Chang1/><ref name="Chang"/>

In [[Report on Manufactures]], considered the first text to express modern protectionist theory, Alexander Hamilton argued that if a country wished to develop a new activity on its soil, it would have to temporarily protect it. According to him, this protection against foreign producers could take the form of import duties or, in rare cases, prohibition of imports. He called for customs barriers to allow American industrial development and to help protect infant industries, including bounties (subsidies) derived in part from those tariffs. He also believed that duties on raw materials should be generally low.<ref>{{cite book |last1=Dorfman & Tugwell |title=Early American Policy |date=1960}}</ref> Hamilton argued that despite an initial "increase of price" caused by regulations that control foreign competition, once a "domestic manufacture has attained to perfection... it invariably becomes cheaper.<ref name=Chang2/> In this report, Hamilton also proposed export bans on major raw materials, tariff reductions on industrial inputs, pricing and patenting of inventions, regulation of product standards and development of financial and transportation infrastructure. The U.S. Congress adopted the tariffs but refused to grant subsidies to manufactures.<ref name=Chang2/>

[[Alexander Hamilton]] and [[Daniel Raymond]] were among the first theorists to present the [[infant industry argument]]. Hamilton was the first to use the term "infant industries" and to introduce it to the forefront of economic thinking. Hamilton believed that political independence was predicated upon economic independence. Increasing the domestic supply of manufactured goods, particularly war materials, was seen as an issue of national security. And he feared that Britain's policy towards the colonies would condemn the United States to be only producers of agricultural products and raw materials.<ref name=Chang1/><ref name=Chang2/>

Britain initially did not want to industrialise the American colonies, and implemented policies to that effect (for example, banning high value-added manufacturing activities). Under British rule, America was denied the use of tariffs to protect its new industries. This explains why, after independence, the Tariff Act of 1789 was the second bill of the Republic signed by President Washington allowing Congress to impose a fixed tariff of 5% on all imports, with a few exceptions.<ref name="Chang2">{{cite book |author1=Ha-Joon Chang |title=Kicking Away the Ladder: Development Strategy in Historical Perspective}}</ref>

The Congress passed a tariff act (1789), imposing a 5% flat rate tariff on all imports.<ref name="Bairoch"/> Between 1792 and the war with Britain in 1812, the average tariff level remained around 12.5%, which was too low to encourage consumers to buy domestic products and thus support emerging American industries. When the [[War of 1812]] broke out, all rates doubled to an average of 25% to account for increased government spending. The war paved the way for new industries by disrupting manufacturing imports from the UK and the rest of Europe. A major policy shift occurred in 1816, when American manufacturers who had benefited from the tariffs lobbied to retain them. New legislation was introduced to keep tariffs at the same levels —especially protected were cotton, woolen, and iron goods.<ref>{{cite book |last1=Thomas C. Cochran, William Miller |title=The Age of Enterprise: A Social History of Industrial America |date=1942}}</ref> The American industrial interests that had blossomed because of the tariff lobbied to keep it, and had it raised to 35 percent in 1816. The public approved, and by 1820, America's average tariff was up to 40 percent.