By PETER BERGER
Tariffs aren’t the most riveting topic we discuss in class. They are, though, a useful window on American history. For starters, they’re part of the arduous compromise that made the Constitution possible.
Tariffs are taxes on trade. Southern states generally objected to tariffs on exports because they’d add to the price of southern plantation produce sold in Europe, make it less competitive internationally, and hurt southern states’ cash-crop, slavery-based economy. Northern states didn’t export much at the time, so they saw export tariffs as benign moneymakers for the new government.
Northerners also generally didn’t mind import tariffs. Since early American manufacturing was less efficient than European manufacturing, European products were commonly less expensive. Import tariffs would make European products more expensive for Americans than un-tariffed American products. Protecting American manufacturing against foreign competition would help the northern economy, where most American manufacturers were located. Southerners received no protective benefit since they did little manufacturing. They just got to pay the higher prices.
In the end both sides compromised. Export tariffs are unconstitutional. Import tariffs are constitutional.
Alexander Hamilton used those import tariffs to help pay off the Revolutionary War debt and lay the foundation of the 19th century American economy.
Forty years later states’ rights and import tariffs nearly started the Civil War a generation before states’ rights and slavery actually did. The tariff protest grew so heated that South Carolina threatened to secede. Andrew Jackson threatened to send troops to collect the tax. He also threatened to hang any man responsible for bloodshed, by which he meant Vice President John Calhoun, who’d authored the tariff protest. Henry Clay, the Great Compromiser, helped postpone the war. This was back when Americans regarded political compromise as a good and necessary thing.
Skipping ahead, the 1890 McKinley Tariff taxed imported sugar, including sugar grown in Hawaii, which wasn’t then part of the United States. To avoid the resulting higher prices American consumers had to pay for Hawaiian sugar, and growers’ resulting lower profits, Americans who controlled the Hawaiian sugar industry overthrew the Hawaiian government and pressed the United States to annex Hawaii. That way the import tariff no longer applied to Hawaii, since it was now part of the United States.
The protectionist provisions of the same McKinley Tariff contributed to the Panic of 1893, an economic depression many Americans blamed on President Cleveland, who took office shortly after it began. In a delightful irony, Americans elected the same McKinley as president in 1896, just in time for the panic to end.
With the enactment of the federal income tax in 1913, tariffs became less the government’s chief moneymaker and more a trade and protectionist tool. To combat the Great Depression, Congress passed the 1930 Hoot-Smawley Tariff. Sponsors hoped that taxing imports would protect American farmers and manufacturers against international competition, and induce American consumers to buy more American-made products. President Hoover reluctantly signed the tariff into law, despite the warnings of prominent economists and business leaders, including J.P. Morgan’s CEO. Henry Ford told Hoover the tariff was “an economic stupidity.”
Unfortunately, it was. Foreign economies, also mired in the Depression, slowed further as Hoot-Smawley’s import tariff cost them American customers. Foreign consumers then bought even fewer American products, both because they could no longer afford them and because their governments enacted retaliatory tariffs. Predictably, the American economy slowed still further.
I’ve never expected my eighth graders to remember all this, though I’ve hoped it might sound familiar should the issue come up in the future. However, I’m pretty sure they cover tariffs at the Wharton School, so President Trump should understand how they work.
Unfortunately, I don’t think he does.
The primary thing I want my students to realize is that tariffs are taxes. United States import tariffs aren’t paid by China in 2019 any more than they were paid by Great Britain in 1789. Import tariffs are paid by American taxpayers when they buy things. When President Trump boasts about how much money his tariff brings in, he’s talking about how much additional money Americans are paying to the government. He could likewise bring in more revenue by raising IRS tax rates. I doubt he’d be bragging about that, though.
That’s because everybody knows federal income taxes are paid by Americans. Most Americans don’t know what tariffs are or who actually pays them. And that’s only one of the things most of us don’t understand.
That includes me, which is one reason we have a representative government, a republic where we choose hopefully knowledgeable, trustworthy fellow citizens to govern us for us. It’s our responsibility to be knowledgeable enough to choose wisely. It’s also our responsibility to ensure that our children have the opportunity to become sufficiently knowledgeable.
Every September I tell my students that in just a few years they’ll be the choosers of government, and that some of them may even be chosen. I tell them to imagine all the eighth grade history classes in the country. Then I tell them to look around the room. I ask how many of them will be ready.
Public school curricula are slouching through their fifth decade of sneering at content knowledge, a neglect that’s particularly targeted history and civics. Students through no deficiency in their intelligence are being denied the knowledge they need to inherit the republic.
How much ignorance can the republic bear?
Peter Berger has taught English and history for 30 years. Poor Elijah would be pleased to answer letters addressed to him in care of the editor.
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