Presentation on theme: "A tariff is a tax levied by a government on imported goods. In some countries it also may be a tax on exported goods. A tariff also is called a customs."— Presentation transcript:
A tariff is a tax levied by a government on imported goods. In some countries it also may be a tax on exported goods. A tariff also is called a customs duty or an impost.
In general terms the purposes of a tariff are twofold: To supply revenue to the government. This was especially true in the early days of the United States when other forms of federal taxation had not been developed To protect domestic producers from foreign competition. Placing a tax on an imported foreign item would make a similar domestic item more competitive in price. Use of this form of tariff is called protectionism. The stock argument presented by protectionists is that such duties are needed only until there is an equalization of production costs between the U.S. and the foreign nation.
The United States Constitution gives Congress the power to collect duties but prohibits the imposition of export duties.
Tariff of 1789 – created primarily to create a revenue stream for the new nation. (Washington Administration)
Tariff of 1816 – first protective tariff part of the American System; supported by Henry Clay and John C. Calhoun; opposed by cotton growers. (Madison Administration) Tariff of 1824 – increases the rate of the protective tariff; opposition in the South grows; (Monroe Administration) Tariff of 1828 (Tariff of Abominations) – higher protective tariffs to protect New England mills; Southerners outraged including Calhoun; Nullification Theory (JQ Adams Administration)
Tariff of 1832 – reformed the tariff rates of 1828 back to the rates of the 1824 tariff; South nor Calhoun impressed; Nullification Crisis; (Jackson Administration) Tariff of 1833 – Clay compromise; gradual decline of rates until they reach 1816 levels; New England states opposed; (Jackson Administration) Tariff of 1842 – upward revision of rates due to economic depression – Panic of 1837 (Tyler Administration)
Tariff of 1846 (Walker Tariff) – Western farmers pushed for tariff reduction so they could sell grain abroad; moving the tariff towards revenue only not protectionism (Polk Administration) Tariff of 1857 – almost free trade status; North opposed (Buchanan Administration) 1861-1865 Wartime Tariff Acts – steadily increased revenue to pay for the Civil War; South not represented in Congress so there was no opposition; (Buchanan and Lincoln Administrations)
Tariff of 1872 – reduced tariffs on some manufactured goods (Grant Administration) Tariff of 1875 – further reduced tariffs by 10% (Grant Administration) Tariff of 1883 Mongrel Tariff – Republicans abandoned reform; duties were lowered on some items but increased on most manufactured goods; opposed by western and southern farmers; supported by northern industrialist; (Arthur Administration)
Tariff of 1890 McKinley Tariff – highest tariff up to that point in US History – 48%. Western and Southern politicians did not oppose in exchange for support of the Sherman Silver Purchase Act – government would buy Silver at market prices and issue notes that could be redeemed for gold or silver; (B. Harrison Administration)
Fordney-McCumber Tariff 1922 – Empowered the President to adjust tariff rates; Tariff Commission created to advise President; (Harding Administration) Smoot-Hawley Tariff 1930 – raised US duties to an all time high; foreign retaliation; (Hoover Administration) Hull Trade Pacts 1934 – reciprocal treaties to reduce tariffs and to stimulate the economy during the depression. (FDR Administration) General Agreement on Tariffs and Trade – UN organization seeking to negotiate lower tariffs
1963-1967 GATT talks to reduce tariffs between the US and Western European Countries. (LBJ Administration) 1973-1979 GATT talks to reduce tariffs with Asian countries. (Nixon, Ford, Carter Administrations) Trade Act of 1974 – President given the authority to reduce/end a tariff on products coming from a developing country (Ford Administration) North American Free Trade Agreement NAFTA – US, Canada, and Mexico end most trade barriers. (Clinton Administration.)