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Black America Web
30-04-2025
- Business
- Black America Web
The Overlooked Link Between Tariffs And Slavery In The US
Black America Web Featured Video CLOSE Source: Rawf8 / Getty Tariffs have long played a central role in American economic and political history. At their core, tariffs are taxes placed on imported goods, intended to protect domestic industries and raise government revenue. But in the early 19th century, tariffs did far more than adjust trade balances. Tariffs stoked regional tensions and played a major role in unraveling America's troubling slavery system. Tariffs are taxes levied by a government on goods imported from other countries. By making foreign goods more expensive, tariffs encourage consumers to buy domestically produced products. While this can benefit local manufacturers, tariffs can also lead to higher prices and retaliatory measures from trading partners. In the U.S., tariffs were one of the federal government's main sources of revenue before the income tax was introduced in 1913. In the United States, one of the very first laws passed by the First Congress was the Tariff Act of 1789, according to The Fordham Journal of Corporate and Financial Law. This foundational legislation had two major goals: to promote trade and raise revenue for the newly established federal government. Alexander Hamilton, the first Secretary of the Treasury, was a major proponent of the Act. He believed tariffs would not only help pay down national debt but also shield the emerging American manufacturing sector from overwhelming foreign competition, especially from Britain. Hamilton saw tariffs as essential to encouraging long-term industrial growth, even in a nation still dominated by agriculture. Though not without opposition, particularly from agrarian interests, the Tariff Act proved to be a powerful fiscal tool. At various points in the 19th century, tariffs accounted for up to 95% of federal revenue, making them critical to funding the operations of the early American government. Source: Print Collector / Getty In the early 1800s, the American South was dominated by a plantation economy centered on large-scale agriculture. Wealth and power flowed from the cultivation of cash crops like cotton, tobacco, and rice—all made possible by the forced labor of enslaved people. Southern prosperity depended heavily on trade with Europe: planters exported raw materials, especially cotton, and in return imported manufactured goods, most notably from Great Britain. Because of this economic model, the South had little interest in protective tariffs. These import taxes—meant to shield domestic industries from foreign competition—drove up the cost of goods Southerners needed but did not produce. While the North was rapidly industrializing and lobbying for tariffs to protect its factories, the South saw these policies as direct threats to its economic interests. The tension over tariffs reached a boiling point with the Tariff of 1828, infamously dubbed the 'Tariff of Abominations' by its Southern critics, The Bill of Rights Institute notes. Pushed by Northern industrialists and their political allies, the tariff imposed duties as high as 49% on imported goods. Supporters argued that such protection was vital to developing American industry and breaking economic dependence on Europe. To them, shielding domestic manufacturing was a matter of national independence, not just economic gain. But for Southern planters, this policy was catastrophic. The tariff made imported goods more expensive and threatened the South's trade relationships abroad. It came at a time when cotton prices were already falling, largely due to the Panic of 1819, which had triggered a prolonged agricultural depression. Southerners feared not only a rise in costs but also retaliatory tariffs from Europe that could shrink foreign demand for American cotton. Frustration over federal economic policy gave rise to a constitutional crisis. In 1832, South Carolina—under the leadership of Vice President John C. Calhoun—took dramatic action. The state passed the Ordinance of Nullification, declaring the 1828 and 1832 tariffs unconstitutional and unenforceable within its borders. The ordinance ordered all state officials to support nullification or face removal from office and directed state courts to ignore federal rulings on the matter. This defiance of federal authority brought the Union to the brink of conflict. President Andrew Jackson, thought himself a Southerner, responded with forceful rhetoric and prepared to send federal troops into South Carolina to ensure compliance, according to Medium. At the same time, he worked with Congress to pass a compromise tariff, which gradually reduced duties. By 1857, average tariff rates had dropped to around 20%, still high by modern standards, but far less punitive than those under the Tariff of Abominations. Although the Nullification Crisis was defused, the rift between North and South only deepened in the decades that followed. Tariffs remained a point of contention, symbolizing broader disputes over states' rights, economic policy, and the future of slavery. When Abraham Lincoln was elected in 1860—on a Republican platform that supported protective tariffs—Southern fears intensified. Secession followed soon after. That's because The South viewed Abraham Lincoln's election in 1860 as a direct threat to the institution of slavery. Lincoln and the Republican Party wanted to limit the expansion of slavery and they felt as though the political balance would tip permanently against them, The Constitution Center noted. As a result, South Carolina seceded in December 1860, followed by 10 other Southern states in the months that followed, forming the Confederate States of America. On April 12, 1861, just over a month after Lincoln's inauguration, Confederate forces opened fire on Fort Sumter in Charleston Harbor, prompting a Union surrender and marking the official start of the American Civil War. As the war dragged on, the Southern economy, so long dependent on slavery and international trade, began to collapse. Union blockades choked off exports, leaving cotton bales to rot on the docks. Britain, which once relied on the U.S. for 80% of its cotton supply, saw prices skyrocket and was forced to turn to new sources, including Egypt and India, according to Smithsonian Mag. The Civil War reshaped not only America but the global economy. As Southern plantations withered under blockades and the loss of enslaved labor, countries around the world capitalized on the vacuum. While the war devastated the South—both economically and socially—it also accelerated the decline of slavery as an institution and shifted the balance of global cotton production. For decades, America's industrial and agricultural sectors had coexisted uneasily, each seeing the other as a rival rather than a partner. In the end, it was not just economic policy, but the unresolvable conflict over slavery, that broke the Union. Yet tariffs, often treated as dry fiscal tools, played a crucial role in fanning the flames. SEE ALSO: The 100-Day Challenge: Biden And Trump Side By Side Trump Believes He's The Reason Shedeur Sanders Was Drafted SEE ALSO The Overlooked Link Between Tariffs And Slavery In The US was originally published on
Boston Globe
08-04-2025
- Business
- Boston Globe
Trump says high tariffs may have prevented the Great Depression. History says different.
Like Trump, Hoover was elected largely because of his business acumen. An international mining engineer, financier and humanitarian, he took office in 1929 like an energetic CEO, eager to promote public-private partnerships and use the levers of government to promote economic growth. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up 'Anyone not only can be rich, but ought to be rich,' he declared in his inaugural address before convening a special session of Congress to better protect U.S. farmers with 'limited changes of the tariff.' Advertisement Instead, the 31st president got the Great Depression. Trump, now championing his own sweeping tariffs that have sent global markets into a tailspin, argues that the U.S. was founded on steep import taxes on goods from abroad. But the country began abandoning them when it created a federal income tax in 1913, the president says. Then, 'in 1929, it all came to a very abrupt end with the Great Depression. And it would have never happened if they had stayed with the tariff policy,' Trump said in announcing his tariff plan last week. Advertisement Referring to Smoot-Hawley, he added, 'They tried to bring back tariffs to save our country, but it was gone. It was gone. It was too late. Nothing could have been done — took years and years to get out of that depression.' America's history of high tariffs actually continued well after 1913, however, and Trump's take on what sparked the Great Depression — and Hoover-era Washington's response to it — don't reflect what actually happened. Gary Richardson, an economics professor at the University of California, Irvine, said the U.S. long maintaining high tariffs 'helped to shift industry here. But we've gotten rid of them because, as the country at the cutting edge of technology, we didn't think they were useful.' 'When we were at our most powerful, right after World War II, we forced a low tariff regime on most of the world because we thought it was to our benefit,' said Richardson, also a former Federal Reserve System historian. 'Now, we're going back to something else.' Tariffs date to 1789 George Washington signed the Tariff Act of 1789, the first major legislation approved by Congress, which imposed a 5% tax on many goods imported into the U.S. With no federal income tax, the policy was about finding sources of revenue for the government while also protecting American producers from foreign competition. After the War of 1812 disrupted U.S. trade with Great Britain, the U.S. approved more tariffs in 1817 meant to shield domestic manufacturing from potentially cheaper imports, especially textiles. High tariffs remained for decades, particularly as the government looked to increase its revenue and pay down debt incurred during the Civil War. Advertisement The Tariff Act of 1890 raised taxes to 49.5% on 1,500-plus items. Championing the move was the 'Napoleon of Protectionism,' William McKinley, an Ohio Republican congressman who would be elected president in 1896 and one of Trump's heroes. But that move caused prices to rise and the U.S. economy to fall. It worsened after the Panic of 1893, when unemployment reached 25%. Historians referred to the period as the 'great depression' until it was superseded by the actual Great Depression. An income tax replaces tariffs A national income tax didn't become permanent until Congress passed the 16th Amendment in 1909, and it was ratified four years later. Despite what Trump suggests, what followed was continued economic growth — fueled by technological advances like the telephone and increased consumer spending after World War I. A construction boom, and increased manufacturing output — particularly for consumer goods that included the automobile — helped spark the 'Roaring 20s.' The Dow Jones Industrial Average increased six-fold — climbing from 63 points in August of 1921 to nearly 400 in September of 1929. It was the Prohibition era and the jazz age, a period of urbanization even as farming remained a key economic driver. Working conditions were often poor, but the standard of living climbed for the middle class, which enjoyed innovations like broadcast radio and washing machines. High tariff policy also persisted, with Congress approving the Fordney-McCumber Act of 1922, which raised levies to their highest in U.S. history on many imported goods in an effort to further bolster domestic manufacturing. That prompted retaliatory tariffs from key U.S. trading partners — mirroring the reactions of contemporary China and other countries to Trump's new levies. Advertisement 'Black Tuesday' and The Great Depression The economy began slowing when the Fed raised interest rates in 1928 and the following year. The idea was mostly to ease a stock market bubble by reducing lending to brokers or firms buying stocks. But that triggered higher interest rates in Britain and Germany, which helped slow global consumer spending and production, and began a U.S. recession in the summer of 1929. The Great Depression began with 'Black Tuesday' on Oct. 29, 1929, when a panic selloff triggered a stock market collapse, wiping out thousands of investors who had borrowed heavily. As consumer demand declined, manufacturing firms laid off workers and idled factories. In subsequent years, the U.S. unemployment rate reached 25%, while economic output plunged nearly 30%. There were thousands of bank failures and widespread business closures, while millions of Americans lost their homes. Smoot-Hawley With self-made wealth and global sympathies, Hoover cut a very different figure than Trump. Hoover was orphaned at 9 and led World War I-humanitarian food relief efforts while living in London. He also served as commerce secretary before running for president. He could be dynamic with small groups but reserved in public. 'There's no theater to Herbert Hoover,' said David Hamilton, a history professor at the University of Kentucky. Trying to keep his campaign promise to protect farmers, Hoover pushed Congress for higher agricultural tariffs. But a chief goal was encouraging farmers to produce new types of crops, and Hoover didn't view steeper U.S. tariffs as incompatible with global trade, Hamilton said. 'He's not weaponizing trade in the way we see today,' said Hamilton, author of 'From New Day to New Deal: American Farm Policy from Hoover to Roosevelt, 1928-1933.' Advertisement Hawley, chairman of the House Ways and Means Committee, originally sought farming protections. But the finished bill went much farther, using high tariffs to protect manufacturing. It passed the House in May 1929. Smoot, who chaired the Senate finance committee, helped oversee passage there in March 1930. Reconciled legislation that became the Smoot-Hawley Tariff Act finally cleared Congress that June. Hoover was conflicted, especially after more than 1,000 U.S. economists signed a letter urging a veto. But he signed the act, saying in a statement, 'No tariff bill has ever been enacted, or ever will be enacted, under the present system that will be perfect.' That's all a departure from another businessman-turned-president, Trump, who grew up wealthy and was a real estate mogul and reality TV star who had never served in government before first winning the presidency in 2016. Trump has long championed tariffs as a way to protect the U.S. economy and manufacturing at the expense of its global trading partners. And he bypassed Congress potentially modifying the scope of his policy aims by declaring an 'economic emergency' to institute tariffs unilaterally. Smoot-Hawley raised import tariffs by an average of 20% on thousands of goods, causing many top U.S. trading partners to retaliate. International cooperation on non-trade issues also declined, including on defense matters, helping clear the way for the rise of Hitler, Richardson said. 'There were some industries where they made profits,' Richardson said of Smoot-Hawley. 'But overall, people in the U.S. and people around the world were losers.' U.S. manufacturers saw foreign markets for their goods evaporate and output and consumer spending sank still further. Hawley lost the 1932 Oregon Republican primary in his district, and Smoot was defeated in November, as Democrat Franklin D. Roosevelt trounced Hoover for the presidency. Advertisement Smoot, Hawley and Hoover largely kept defending their tariff policies in subsequent years, blaming international trade policies and external monetary forces — as well as Democrats — for America's economic woes. The economy wouldn't begin its recovery until the outbreak of World War II increased demand for factory production in 1939. 'Economic depression cannot be cured by legislative action or executive pronouncement,' Hoover said in December 1930. 'Economic wounds must be healed by the action of the cells of the economic body -- the producers and consumers themselves.
Yahoo
02-04-2025
- Business
- Yahoo
How Trump's ‘Liberation Day' tariffs could kill American innovation
On Wednesday, President Donlad J. Trump announced a sweeping new round of tariffs on goods coming into the United States. Standing in the Rose Garden, he declared the moment 'liberation day,' though it was hardly the first time the government has tried to protect domestic manufacturers from foreign competition. The practice dates to America's founding. After states ratified the Constitution and seated the first Congress, James Madison sponsored, and his colleagues passed, the country's first major piece of legislation: the Tariff Act of 1789. President George Washington signed the bill into law, setting off centuries of spiraling consequences for American competition and innovation that experts say should serve as a cautionary tale for a litany of modern industries, including clean energy technology. The Tariff Act levied, among other fees, a duty of 50 cents per ton on goods imported by foreign ships. The goal was to raise money and bolster American shipbuilders. Some iteration of this effort has existed virtually ever since; most recently as the 1920 Jones Act, which restricts domestic shipping to vessels that are built and registered in the United States, owned by American firms, and staffed by U.S. citizens. In an era of wooden ships and limited globalization, these protections had little effect. American timber and American ships were naturally the best route for most companies. Before the revolution, even the British built one-third of their ships here. But by the late 1800s, technology was changing. Steamships and metal hulls were rapidly becoming the norm, yet U.S. shipbuilders remained insulated from competition. In 1900, the U.S. produced about 20 percent of the world's ships by tonnage. By 1914, U.S.-flagged merchant vessels carried just 10 percent of ocean trade. In the 1970s, U.S. shipyards were building about 5 percent of the world's tonnage. Today it's around two-tenths of a percent — less than 5 ships per year. 'U.S. shipbuilders haven't been competitive since just after the Civil War,' said Colin Grabow, associate director of the Herbert A. Stiefel Center for Trade Policy Studies at the libertarian Cato Institute. Grabow is an expert on the Jones Act and says American companies are still feeling its impacts. The U.S. only recently, for example, gained access — via a manufacturing license — to a Finnish dredging ship that the rest of the world has been able to use for 30 years. Offshore wind developers have pointed to the Jones Act as a major impediment to transporting turbines. The price of a U.S.-built ship is now as much as five times higher than those built abroad — up from a difference of about 20 percent in 1920. Grabow says Trump's tariff push is set to create the same sort of protectionist woes that the shipbuilding industry has faced, on a much larger scale. 'We're going to keep your foreign competitors out. What's the incentive to innovate in that kind of environment?' he said. 'If you look around the world, countries that are more closed and more protectionist don't tend to be cradles of innovation.' Clean energy technologies could be especially hard hit because so many key components — from batteries to solar cells — come predominantly from overseas. The tariffs Trump announced Wednesday range from 10 percent on the United Kingdom to 20 percent on the European Union. China will face duties of 34 percent, while Cambodia's stand at 49 percent. These are in addition to a 10 percent tariff on all other countries the president announced and the recent hikes targeting aluminum, steel, and auto manufacturers. 'Taxpayers have been ripped off for more than 50 years,' Trump said in remarks at the White House. 'But it is not going to happen anymore.' Tariffs could raise hundreds of billions of dollars in revenue but those added costs are often passed on to consumers and could result in higher prices for cars, heat pumps, or utilities. 'People are focused on the immediate price impacts,' said Catherine Wolfram, an economist focused on energy at the MIT Sloan School of Management. But the longer the tariffs are in place, the greater the chance that America's clean energy industry falls further behind the rest of the world, especially China. Electric vehicles are one area that this could play out. If foreign competitors are tariffed out of the U.S. market, domestic automakers may not feel the need to produce cars with longer ranges, more efficient technologies, or other cutting-edge features. 'The same logic applies whether you're talking about solar cells or any other input into the clean tech space,' said Wolfram. 'One of our core strengths is that we're innovative [and] you're protecting American companies from pressure to innovate.' The reverse logic is also true, says Steven Knell, president of Energy Intelligence, an industry analysis firm. Trump's tariffs will not only ease the impetus for domestic inventiveness but also make it more expensive for American companies to adopt innovations developed abroad. 'Some of what has allowed the clean tech industry to be successful over the course of the last 20 years has been globalized market opportunities,' he said. 'That's certainly a potential risk of the way in which the administration is suggesting it's going to pursue things.' Arguments for protectionism often fall into a few buckets, said Grabow, including national security and the need to boost fledgling industries, but those policies have tended to remain in place far beyond their stated need. 'That's one of the dangers with protectionism, is once you put that in place, it's hard to put the toothpaste back in the tube,' he said. 'Historically, you find very few examples of where the government gets rid of protectionism.' Grabow points to decades of government support for the sugar industry as another example of a sticky situation. Using a mix of quotas, tariffs and price supports, the Government Accountability Office found, in 2023 that federal policies aimed at protecting sugar farmers are raising prices and, on the whole, costing Americans $1 billion each year. The tariffs that Trump instituted in his first term have similarly been shown to be a net drag on the American economy. 'They've done the studies, they've done the math on it and we know it's been an economic loser. But [President Biden] didn't get rid of them,' said Grabow, citing the historical power Interest groups and lobbyists have shown in keeping protections in place. With Trump's latest moves, he says, 'take that dynamic and apply it all across the board.' For Wolfram, Trump's tariffs are only part of the problem when it comes to clean energy. Their impacts, she said, will be exacerbated by the fact that his administration is also trying to dismantle climate policy — especially the Inflation Reduction Act — and is targeting federal scientific research, and scientists, as part of its sweeping government cuts. 'It's a triple whammy,' she said, adding that there could be even more to come. 'Four years is a long time.' This story was originally published by Grist with the headline How Trump's 'Liberation Day' tariffs could kill American innovation on Apr 2, 2025.
