European trade with the United States: Historical Background - Business in United States of America

European trade with the United States

European trade with the United States: Protectionism and New Policies

European trade with the United States: The European Union

United States Trade with the European Union, 1997-2007

The United States followed a policy of protectionism until the 1940’s. Tariffs and import-export policy were considered domestic issues until the 1920’s, and the government’s chief objective was to protect farmers and manufacturers from foreign competition. The Constitution prohibited duties on exports but not tariffs on imports. In 1789, the United States Congress passed its first Tariff Act. The tariff, set relatively low at 5 percent, was a means of collecting revenue for the nation.

During the War of 1812, American manufacturers operated without any competition from British manufacturers. In 1816, after the war concluded, tariffs were raised to protect American manufacturers by keeping imports from Britain low. The increased tariff was also seen as a means for paying the war debt. However, British goods appeared in American markets in spite of the tariffs. Not all members of Congress were in favor of high tariffs. A battle over tariffs ensued in 1828; those opposed to tariffs encouraged the protectionist members of Congress, who were preparing a new tariff bill, to place in the language of the bill excessively high tariffs on every possible commodity. They believed that the bill would defeat itself. They were wrong, and a bill known as the Tariff of Abominations passed. In 1833, Congress reduced these tariffs. By 1861, higher tariffs were once again being authorized.

The high tariffs caused both domestic and international problems for the United States. Europe was a major market for the cotton and tobacco grown on the plantations in the southern states. The high tariffs angered the European markets and made export sales difficult as retaliatory tariffs and duties were implemented. Domestically, the southern farmers viewed the tariffs as an attack on their economic and cultural base. This widened the chasm between North and South in the United States.