Is Is Protectionism the Correct Policy Of
Is Is Protectionism the Correct Policy Of
The argument regarding protectionism and free trade in America can be traced back to our Founding Fathers. The first significant legislation passed by the First congress in 1789 and signed into law by President Washington on July Fourth was a protectionist tariff that provided for over 90 percent of the revenues to operate the new government and encouraged the building of industries and development of family farms. In contrast, Benjamin Franklin, who understood the danger of trade restrictions said, “No nation is ever ruined by free trade.” The argument has continued throughout history and is a major issue in current politics. To better understand this argument I turned to our most valuable resource, history, and as a result have found free trade with all nations to be the only correct policy for United States government. Tariffs should only be used to fund the necessary functions of government. (Ideally I feel there should be no tariffs or excise taxes.) .”
Prior to ratification of the Constitution, states had their own development policies. Delegates from the states sent to Constitutional Convention in 1787 put high priority on solving problems of interstate trade amongst states. Delegates chose to eliminate trade barriers between states. This allowed the division of labor to develop freely, thereby greatly increasing productivity. Despite our government’s insight into the benefits of free trade amongst states, protectionist ideals were still passed.
Trade restrictions on foreign products, also known as protective tariffs, were used by Alexander Hamilton during George Washington’s presidency. James Madison agreed with Secretary of Treasury Hamilton, with the belief that imposing protective tariffs such as the Tariff of 1816 would allow American producers to compete with their lower-priced foreign competitors. Acceptance of Hamiltons pro-industrial, anti-agricultural, anti-British foreign policy led to a series of international trade barriers, like the Embargo Act and the Non-Intercourse Act, extreme protectionist measures. Beginning with the tariff of 1816 these measures led to the Tariff of Abominations in 1828 that pitted the agricultural South against the industrial North. South Carolina led the way in nullifying the Tariff Acts of 1828 and 1832, and threatened secession of the national government.
Just as the states were forbidden to manage interstate commerce, the national government should have been forbidden to manage international commerce.
Protectionists argue that by raising tariffs on imports; foreign producers will be forced to raise the prices of exported goods, thus making it easier for domestic producers to compete. Although this seems like a reasonable action, history has shown us that American consumers are the ones who pay for our government’s good intentions. Tariffs, quotas and other trade barriers artificially raise the cost of foreign goods but they also increase the price that consumers must pay. I hold an opinion parallel to that of John C. Calhoun, Andrew Jackson’s vice-president, who called the Tariff of 1828 a “tariff of abominations.” Calhoun’s argument that the North became rich at the South’s expense due to British retaliation to a tax on their exports can be seen today. Fast growing protectionism in the United States is leading to new restrictions elsewhere and these restrictions are almost always aimed at our best exporters. This is only one way that protectionism actively harms domestic jobs. U.S. protectionism also costs jobs by raising the cost of imports that are needed by domestic industries who consume foreign goods. Those producing or offering less competitive goods or services might argue that they would be placed in jeopardy if they had to compete in a free market. Although this is quite possible, in a free society, theres nothing to stop them from taking the action necessary to make themselves competitive and to turn the tables on the foreign imports. After all, under free trade, they would have access to world markets that would be inaccessible under any policy of protectionism. But when governments intervene, even on their behalf, these opportunities are lost.
In agreement with Wilson’s Underwood Tariff which lowered domestic tariff rates on imported goods, free trade is beneficial to consumers, business and American workers. Since no single individual can produce all of the different goods he needs to maintain his life and achieve happiness all individuals need to have the freedom to acquire what they want by means of trade with others. To extend free trade over a larger area would increase the size of the market and therefore increase the choices of sellers and buyers. Sellers would be able to reach new customers and their businesses would grow while buyers would have more choices. While the republicans continue to push for free trade, some may argue that