History Protectionism

1 history

1.1 in united states
1.2 in europe
1.3 in latin america

history

tariff rates in japan (1870-1960)



tariff rates in spain , italy (1860-1910)

historically, protectionism associated economic theories such mercantilism (which focused on achieving positive trade balance , accumulating gold), , import substitution.

in 18th century, adam smith famously warned against interested sophistry of industry, seeking gain advantage @ cost of consumers. friedrich list saw adam smith s views on free trade disingenuous, believing smith advocated freer trade british industry lock out underdeveloped foreign competition.

some have argued no major country has ever industrialized without form of economic protection.

economic historian paul bairoch wrote historically, free trade exception , protectionism rule .

according economic historians douglas irwin , kevin o rourke, shocks emanate brief financial crises tend transitory , have little long-run affect on trade policy, whereas play out on longer periods (early 1890s, 1930s) may give rise protectionism difficult reverse. regional wars produce transitory shocks have little impact on long-run trade policy, while global wars give rise extensive government trade restrictions can difficult reverse.

one paper notes sudden shifts in comparative advantage specific countries have led said countries become protectionist: shift in comparative advantage associated opening of new world frontiers, , subsequent “grain invasion” of europe, led higher agricultural tariffs late 1870s onwards, have seen reversed move toward freer trade had characterized mid-nineteenth-century europe. in decades after world war ii, japan’s rapid rise led trade friction other countries. japan’s recovery accompanied sharp increase in exports of product categories: cotton textiles in 1950s, steel in 1960s, automobiles in 1970s, , electronics in 1980s. in each case, rapid expansion in japan’s exports created difficulties trading partners , use of protectionism shock absorber.

in united states


tariff rates(france, uk, us)



average tariff rates in (1821–2016)



u.s. trade balance (1895–2015)

according economic historian douglas irwin, common myth u.s. trade policy low tariffs harmed american manufacturers in 19th century , high tariffs made united states great industrial power in late 19th century. review economist of irwin s 2017 book clashing on commerce: history of trade policy notes:

political dynamics lead people see link between tariffs , economic cycle not there. boom generate enough revenue tariffs fall, , when bust came pressure build raise them again. time happened, economy recovering, giving impression tariff cuts caused crash , reverse generated recovery. mr irwin methodically debunks idea protectionism made america great industrial power, notion believed offer lessons developing countries today. share of global manufacturing powered 23% in 1870 36% in 1913, admittedly high tariffs of time came cost, estimated @ around 0.5% of gdp in mid-1870s. in industries, might have sped development few years. american growth during protectionist period more abundant resources , openness people , ideas.

according paul bairoch, united states mother country , bastion of modern protectionism since end of 18th century , until post-world war ii period.

in europe

europe became increasingly protectionist during eighteenth century. economic historians findlay , o rourke write immediate aftermath of napoleonic wars, european trade policies universally protectionist, exceptions being smaller countries such netherlands , denmark.

europe increasingly liberalized trade during 19th century. countries such britain, netherlands, denmark, portugal , switzerland, , arguably sweden , belgium, had moved towards free trade prior 1860. economic historians see repeal of corn laws in 1846 decisive shift toward free trade in britain. 1990 study harvard economic historian jeffrey williamsson showed corn laws (which imposed restrictions , tariffs on imported grain) substantially increased cost of living unskilled , skilled british workers, , hampered british manufacturing sector reducing disposable incomes british workers have spent on manufactured goods. shift towards liberalization in britain occurred in part due influence of economists david ricardo , due growing power of urban interests .

findlay , o rourke characterize 1860 cobden chevalier treaty between france , united kingdom decisive shift toward european free trade. treaty followed numerous free trade agreements: france , belgium signed treaty in 1861; franco-prussian treaty signed in 1862; italy entered “network of cobden-chevalier treaties” in 1863 (bairoch 1989, 40); switzerland in 1864; sweden, norway, spain, netherlands, , hanseatic towns in 1865; , austria in 1866. 1877, less 2 decades after cobden chevalier treaty , 3 decades after british repeal, germany “had virtually become free trade country” (bairoch, 41). average duties on manufactured products had declined 9–12 percent on continent, far cry 50 percent british tariffs, , numerous prohibitions elsewhere, of immediate post-waterloo era (bairoch, table 3, p. 6, , table 5, p. 42).

some european powers did not liberalize during 19th century, such russian empire , austro-hungarian empire remained highly protectionist. ottoman empire became increasingly protectionist. in ottoman empire s case, however, had liberal free trade policies during 18th 19th centuries, british prime minister benjamin disraeli cited instance of injury done unrestrained competition in 1846 corn laws debate, arguing destroyed had been of finest manufactures of world in 1812.

the countries of western europe began steadily liberalize economies after world war ii , protectionism of interwar period.

in latin america

according 1 assessment, tariffs far higher in latin america rest of world in century prior great depression.