Editor’s note: This commentary is by Peter Berger, who has taught English and history for 30 years, writes “Poor Elijah’s Almanack.” The column appears in several publications including the Times Argus, the Rutland Herald and the Stowe Reporter.
[T]ariffs aren’t the most riveting topic we discuss in history class. They lack the drama and moment of Lexington and Concord, they don’t measure up to the Declaration of Independence in reasoning or soaring rhetoric, and the tariff stories I tell my students pale in comparison to the sacrifice and valor of Valley Forge.
Tariffs are, however, 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 typically less efficient than more established European manufacturing, European products were commonly less expensive. Import tariffs would make European products more expensive for Americans than the now relatively less expensive un-tariffed American products. Protecting American manufacturing this way against foreign competition would help the Northern economy, where most American manufacturers were located. Southerners received no protective benefit since they did very 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 what became the modern 19th century American economy.
Thirty years into that century, 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 any resulting bloodshed, by which he meant his former vice president, John Calhoun, who’d authored the tariff protest. The war was postponed through the efforts of Henry Clay. He was known as the Great Compromiser 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 and intensified the Panic of 1893, an economic depression many Americans blamed on President Grover 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. Protection was the avowed purpose of the 1930 Smoot-Hawley Tariff. With the American economy in the throes of the Great Depression, Congress 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, against the advice and despite the warnings of prominent economists and business leaders, including the CEO of J.P. Morgan. Henry Ford told Hoover the tariff was “an economic stupidity.”
Unfortunately, it was. Foreign economies, which were also mired in the Depression, slowed further as Smoot-Hawley’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 don’t expect my students to one day regale their grandchildren with what they learned about tariffs in eighth grade. I don’t expect most will carry around in the front of their minds what I’ve said. It’s been my hope, though, that should tariffs, or any issue, come up in the future, it will be familiar enough that they’ll have a starting point from which to refresh and apply their understanding.
At least some will. The more, the better.
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 that 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 year 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?
