Clashing Over Commerce: A History of U.S. Trade Policy by Douglas A. Irwin

Spring/​Summer 2018 • Cato Journal

During the first 16 months of Donald Trump’s tumultuous presidency, the subjects of trade, tariffs, and America’s role in the global economy have featured prominently in the public square. Although it may not have been as obvious before 2017, the conduct and consequences of U.S. trade policy—and, perhaps more so, the misconceptions surrounding it—have long stirred the people’s passions.

That’s not news to Dartmouth economics professor Douglas A. Irwin, whose latest treatise on the history of U.S. trade policy documents in exquisite detail how “The Tariff” has sparked bitter political, economic, and constitutional debate and has been a persistent source of sectoral conflict from the founding of the republic to the present.

Clashing over Commerce: A History of U.S. Trade Policy was written, according to Irwin, to fill a glaring void. The last major history of U.S. trade policy to be published was the 8th edition of A Tariff History of the United States in 1931, by Frank Taussig, the famous Harvard trade economist who became the first chairman of the U.S. Tariff Commission (predecessor of the U.S. International Trade Commission) when it was created in 1916. As Irwin aptly demonstrates in Clashing, much trade policy history has transpired since 1931.

But Irwin doesn’t begin where Taussig left off. He starts in colonial times to make certain his readers understand not only that U.S. trade policy played a major role in shaping the course of U.S. history, but that the mercantilist trade policies of the British Empire—such as the Navigation Acts, which precluded direct trade between the American colonies and other countries and required all goods be channeled through England—contributed to the growing anti‐​Crown fervor that eventually erupted into revolution and the birth of a nation.

In the introduction, Irwin references Federalist 10, in which James Madison notes that in every society there exist competing economic interests with contrasting views about what government policy ought to be. Alluding to what we would call the process of trade policy formulation today, Madison observed:

Shall domestic manufactures be encouraged, and in what degree, by restrictions on foreign manufactures? are questions which would be differently decided by the landed and the manufacturing classes, and probably by neither with a sole regard to justice and the public good.… It is in vain to say that enlightened statesmen will be able to adjust these clashing interests, and render them all subservient to the public good.

Irwin’s broad thesis, however, is that despite these bitter debates and the frictions and conflicts generated by this clashing of self‐​interests, U.S. trade policy has shown remarkable stability throughout the nation’s history. Irwin attributes that stability to a geographic continuity of economic interests (such as steel production in Pennsylvania, tobacco farming in Kentucky, textile manufacturing in South Carolina) and the separation of powers (Madison’s handiwork), which makes wrenching policy changes less likely. “Producer interests, labor unions, advocacy groups, public intellectuals, and even presidents can demand, protest, denounce, and complain all they want,” Irwin writes, “but to change existing policy requires a majority in Congress and the approval of the executive. If the votes are not lined up, the existing policy will not change.”

In fact, Irwin argues that U.S. trade policy substantively changed course only twice in our history, both times in response to exogenous shocks which led to political realignments—the Civil War and the Great Depression. Within each of the three periods delineated by these two shocks, policy continuity largely prevailed. But the shocks themselves heralded wholesale changes in the objectives of U.S. trade policy. In Irwin’s shorthand, the objectives of the three periods, chronologically, were “revenue, restriction, and reciprocity.”

From the Founding in 1787 until the Civil War, the main purpose of the tariff was to raise revenues for the operations of a modest federal government that had few other means of funding. Much of the early debate in this era was over the question of how high a tariff “for revenue only” should be. Some worried that too high a tariff would squeeze foreigners’ incomes, reducing the market for U.S. commodity exports. Others were wary that too much funding of the federal government would encourage its growth and encroachment into the jurisdiction of the states. Indeed, those concerns were very much at the heart of the conflicts over the 1828 Tariff of Abominations and the South Carolina Nullification Crisis in 1832. On the latter subject, Irwin notes—with a hint of pride—that trade policy was important enough to be the catalyst for America’s first significant constitutional crisis.

Although the tariff was used to protect domestic industry on occasion during this era, it wasn’t until after the Civil War that bald protectionism became the tariff’s primary motive. With the end of the Civil War came the ascent of the Republican Party, which represented northern industrial interests that for decades had been clamoring for protection over the objections of southern agrarian interests. For most of the period between 1865 and 1932, Republicans controlled Congress and the White House, and restriction of imported manufactures to protect America’s growing industrial concerns became the tariff’s main purpose. The lobbying industry as we know it today has its roots in this era.

Describing the legislative process surrounding the writing of the Mongrel Tariff of 1883, Irwin cites a reporter at the time who wrote:

Lobbyists descended like a flock of buzzards upon Washington, crowding all the hotels that winter, pulling, tugging at the statesmen in the name of the all the diverse, conflicting interests that employed them, … as committeemen in both chambers wrestled with long schedules and with the unblushing and unending demands of lobbies for sugar, iron, wool, glass, marble, and a hundred other trades.

With a few small exceptions, pro‐​tariff Republicans held sway over trade policy until the early 1930s. As the disastrous effects of the Tariff Act of 1930 (the “Smoot‐​Hawley” or “Hawley‐​Smoot Tariff,” as Irwin calls it) were rippling across the globe, and the Democrats returned to power in Washington, the main function of the tariff became a nobler one: reciprocity. According to Irwin’s thesis, from the 1934 Reciprocal Trade Agreements Act to the founding of the General Agreement on Tariffs and Trade in 1947, through the multiple GATT rounds culminating in the founding of the World Trade Organization in 1995, and through the Obama presidency, inducing foreign governments into reciprocal trade liberalization was the main purpose of the tariff.

Irwin is the author of five other books covering different aspects and themes of trade policy history, including Against the Tide: An Intellectual History of Free Trade, in which he masterfully assesses and dispenses with formidable challenges to Adam Smith’s theories about the primacy of specialization and free trade. But Clashing is easily Irwin’s most ambitious undertaking.

Covering 250 years of trade policy in 693 pages of text and 185 pages of notes and references, the book is not for the fainthearted. But neither is it “narcolepsy engendering,” as Irwin admits some historians consider lengthy tariff tomes to be. It is comprehensive in coverage, rich in detail, and presented as history ought to be, which is to say factually, objectively, and with an engaging narrative. And, frankly, those hungering for a more substantive discussion about trade policy will find the book a welcome refuge from the boisterous, often fact‐​starved exchanges witnessed nowadays on cable news and social media.

The book covers many subthemes, including the tensions and rationales behind Congress’s delegation of some of its constitutional authority over trade policy to the executive branch. Irwin could not have known when he began writing the book how topical that subject would be in 2018—with President Trump seemingly testing the limits of that authority by invoking dusty statutes to levy tariffs. Persistent, historically relevant questions—such as whether the tariff helped or hindered U.S. development, whether tariff policy was a cause of the Civil War, and whether Smoot‐​Hawley caused the Great Depression—are all given thorough analysis in the book. Likewise, the book describes the views and motives of many figures from history who helped shape U.S. trade policy for better or worse: Franklin, Hamilton, Jefferson, Daniel Webster, Cordell Hull. Henry Clay, with his advocacy of “The American System” of protection, evokes the typical modern day economic nationalist. Robert Walker, Treasury Secretary to James Polk, in his insistence that foreign trade barriers are no excuse for our own, evokes Frederic Bastiat and Milton Friedman.

If there is any major question that lingers after reading Clashing, it is whether Irwin is prepared to accommodate substantive revisions in subsequent editions. Although not a challenge to his broad thesis that U.S. trade policy has been guided by the three Rs (Revenue, Restriction, Reciprocity), it seems reasonable to posit that, under the direction of President Trump, the United States is departing the era of reciprocity and entering, perhaps, a new R: the era of Retribution.

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