“Can someone show where a tariff on foreign goods went well for the USA in the past?
Care to handle this one SOTS?”
From 1865 to 1900, the average tariff paid (not the posted tariff, the tariff paid) on imported goods into the US exceeded 27% in every year. In 1990 the average tariff paid was 2.8% and today the average tariff paid is 1.3%. Today foreign factories pay less (as a percentage of product value) for access to the US market than the American consumer pays in sales taxes to purchase those same products.
The US enjoyed unprecedented industrial growth and economic expansion in the 35 years following the Civil War and became the largest industrial power on the planet. From 1865 to 1900 the average income of non farm workers grew by 75% and grew another 33% by 1918. The number of farms tripled in the nation from 1860 to 1905. GNP grew 600% from 1865-1900. In 1865 there were 35,000 miles of railroad track in the US, by 1900 193,000 miles. US entrepreneurs and inventors created entire industries and innovations — petroleum, electric lighting, camera, typewriter, phonograph, motion pictures, telephone, the department store, national discount store chains (Woolworth), mail order catalogs (Sears), prepackaged foods (Kellogg, Post), refrigeration, and the corporate organization structure. Manned flight would follow in 1903.
I suggest the 35 year period of record economic growth from 1865-1900 is proof high protective tariffs can facilitate a period of rapid economic expansion and high innovation. I would also suggest the past 25 years of virtually zero tariffs, with the resulting deindustrialization, have been a disaster for the US economy and the average working American who has seen a decline in his/her standard of living for the first time in US history.
Here is how I see tariffs on the other hand...
This is the argument that Professor Walter Williams made.
Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?
Or, imagine I were a politician and told you that the Russian, Chinese, Korean, Brazilian and German governments were ripping off their citizens by, on the one hand, taxing them to provide subsidies to their domestic steel industries and, on the other, erecting tariff barriers forcing them to pay higher prices for products made with or containing steel.
Would you deem it responsible or intelligent of me to propose retaliatory tariff policy, whereby Americans are ripped off until Russia, China, Korea, Brazilian and German governments stop ripping off their citizens?
Both of these scenarios are applicable to the Bush administration’s 30 percent steel tariffs imposed when he was president. Those tariffs caused the domestic price for some steel products, such as hot-rolled steel, to rise by as much as 40 percent. The clear beneficiaries of the Bush steel tariffs were steel industry executives, stockholders and the approximately 1,700 steelworker jobs that were saved. Well and good, we SEE the jobs saved. But what about the effects that WE DON’T SEE?
Frederic Bastiat said long ago.... “Let us accustom ourselves, then, to avoid judging of things by what is seen only, but to judge of them by that which is not seen.”
Tariff policy beneficiaries are always visible, but its victims are mostly invisible. Politicians love this. The reason is simple: The beneficiaries know for whom to cast their ballots, and the victims don’t know whom to blame for their calamity.
According to a study by the Institute for International Economics, saving those 1,700 jobs in the steel industry cost American consumers $800,000 in the form of higher prices for each steelworker job saved. That’s just the monetary side of the picture. According to a study commissioned by the Consuming Industries Trade Action Association, higher steel prices have caused at least 4,500 job losses in no fewer than 16 states — over 19,000 jobs in California, 16,000 in Texas, and 10,000 in Ohio, Michigan and Illinois. In other words, industries that use steel are forced to pay higher prices, the products they produce become less competitive and they must lay off workers.
Article I, Section 8 of the U.S. Constitution says Congress has the authority “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” It wasn’t the Framers’ intent to give one group of Americans, such as those in the steel industry, the power to use Congress tax other Americans.
When Congress creates a special advantage for some Americans, it must of necessity come at the expense of other Americans. Those Americans who’re harmed, such as steel-using industries, descend on Congress, asking for some kind of relief for themselves.
Why can’t the same argument apply to OTHER industries we try to protect with tariffs?