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Paris Monument after WW II |
I brought little previous knowledge about tariffs to this blog. In fact, I was so inadequately informed that I decided to do some research to help me understand the basics.
The definition of a tariff is a tax on imports. The next thing that my research found was the following statement: "There is much misinformation about who actually pays tariffs." I decided to turn to history, but as I cannot read the future, my history will stop before the tangle of today!
For those of you who read my recent blog about the Battle of Bunker Hill you will be familiar with the fact that the Americans were angry with the British for imposing the stamp act, requiring taxes on paper, including taxes on such papers as playing cards and legal documents. This seems to be a good introduction to the use of tariffs and the disagreements and anger tariffs can cause.
Despite the resentment the Americans felt toward the English Tariffs, the Tariff Act of 1789 was one of the very earliest bills George Washington signed following his election. He imposed a tariff of about 5% on nearly all imports. Ironically, much as they disliked the fact that the British had imposed taxes on them, once they became a nation, many believed that America needed Tariffs in order to catch up with other older nations.
Although Thomas Jefferson initially disapproved of tariffs, as President he admitted that his views had changed. His explanation could not but remind me of the old saying, "It all depends on whose Ox gets gored." One of the problems for American Presidents was the size of our nation and the differences in protection needed through tariffs. Manufacturers in New England saw things one way while cotton plantation owners saw things differently.
Thomas Jefferson acknowledged his change of perspective. James Monroe acknowledged his preference in favor of unrestricted commerce, but admitted that it is not always possible, since reciprocity and international peace "has never occurred and cannot be expected," causing him to believe that "strong reasons...impose on us the obligation to cherish and sustain our manufactures."
In contrast, Democratic President Grover Cleveland campaigned against the tariff as not only corrupt but also inefficient. Different presidents saw the need for tariffs differently.
Jumping ahead in time, after WW II, the United States promoted the General Agreement of Tariffs and Trade, which became the World Trade Organization, replacing the previous methods regarding taxes. American industry and labor prospered. Yet, as most things happen, the world has changed, and as I promised at the beginning of this blog, I will not attempt to explain today's positions on Tariffs, nor will I predict outcomes. Different generations have seen the use of Tariffs differently, and whether it will change again and who might pay I cannot say.