Central to the United States’ ascent from fledgling nation to world superpower was the utilization of protective tariffs, a pillar of Henry Clay’s American System Economics. Protective tariffs drove economic growth, safeguarded American jobs and sustained thriving communities. Unfortunately, this once-vital tool has been dismantled in recent decades, leaving the country’s industrial power decimated, and countless cities and towns across the nation hollowed-out and hopeless.
The idea behind these tariffs is simple: by taxing imported goods, we make domestic production more competitive and create incentives for businesses to invest in American workers and facilities. For much of the 19th and early 20th centuries, protective tariffs, also known as import duties, were a cornerstone of American economic policy, helping to build a strong, self-sufficient economy. But in the post-World War II era, the tide began to turn against tariffs, as the U.S. and other countries embraced free trade and the removal of trade barriers.
One of the key pieces of legislation that led to the dismantling of protective tariffs was the General Agreement on Tariffs and Trade (GATT), signed in 1947. This agreement aimed to reduce tariffs and other trade barriers worldwide, with the goal of promoting economic growth and stability. While GATT had some positive effects, it also resulted in a steady erosion of the use of tariffs as a tool for protecting American industry and workers. GATT was followed by a number of initiatives with a similar aim.
The Trade Expansion Act of 1962 was a U.S. federal law that granted the President authority to negotiate reductions in tariffs and trade barriers with other countries. The act allowed the President to negotiate these agreements without the need for congressional approval, though Congress had the authority to reject or modify the agreements. The Trade Expansion Act was used by successive Presidents to negotiate additional destructive trade agreements, including the North American Free Trade Agreement (NAFTA).
Ratified in 1994, NAFTA further liberalized trade between the United States, Canada, and Mexico. NAFTA was marketed as a way to create jobs and increase economic growth, but in reality, it resulted in the loss of hundreds of thousands of American jobs as companies moved production to Mexico to take advantage of lower labor costs.
Another blow to protective tariffs came with China’s entry into the World Trade Organization (WTO) in 2001. China’s low-cost labor along with its weak labor and environmental regulations made it an attractive destination for companies looking to cut costs, leading to the outsourcing of millions more American jobs
The results of these trade policies were catastrophic for American workers and communities. From 2000 to 2015, the U.S. shed over five million manufacturing jobs, dropping from over 17 million to just over 12 million. Meanwhile, wages for working-class Americans have remained stagnant, even as the cost of living has risen markedly.
The dismantling of protective tariffs is a cautionary tale about the dangers of unchecked free trade. By giving up this critical tool, we have left ourselves vulnerable to job losses and economic instability. It’s time to reassess our approach to trade and put American workers and communities first.
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