Average tariff on imports

2

0

10

20

30

40

50

60

70

1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010

perc

ent

Dutiable ImportsTotal Imports

Major themes

• Trade policy has always been a divisive political issue

• Yet trade policy also shows continuity (status quo bias)

Why continuity?

• Persistence in geographic location of production

• Persistence in composition of exports & imports

• Persistent regional economic interests

• Political power based on geography → voting patterns in Congress

House of Representatives votes on the 1828 Tariff (a) and 1929 Smoot-Hawley Act (b)

Map courtesy Citrin GIS/Applied Spatial Analysis Lab, Dartmouth College

(a) (b)

Stable political geography

Persistent tariff structure, 1867 - 1939

ChemicalsEarthenware

Metals

Wood

Sugar

Tobacco

Agriculture

Spirits

Cotton

Flax

Wool

Silk

Pulp

050

100

150

Tarif

f in

1939

0 50 100 150Tariff in 1867

Not all continuity, some change

1. Revenue (1790-1860)

2. Restriction (1860-1934)

3. Reciprocity (1934-present)

11

Transitions

• Civil War

political power shifts to Republicans (North)introduction of high tariffs

• Great Depression

political power shifts to Democrats (South)delegation of negotiating authority to president

12

Explaining Policy Persistence:few political transitions

• 1837-1861 – Democrats (South) dominate• 7 unified (6 D, 1 R), 5 divided• 2 transitions

• 1861-1933 – Republicans (North) dominate• 21 unified (17 R, 4 D), 14 divided• 4 transitions

• 1933-1993 – Democrats (South/North) dominate• 16 unified (15 D, 1 R), 14 divided• 2 transitions

13

Average tariff on imports

14

0

10

20

30

40

50

60

70

1790 1810 1830 1850 1870 1890 1910 1930 1950 1970 1990 2010

perc

ent

Dutiable ImportsTotal Imports

Various themes

• Always concerned about foreign “unfair” trade practices

• Presidents usually don’t know much about trade

• Partisan positions rooted in economic geography

• Populists always upset with status quo

16

Partisan switch

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Shar

e vo

ting

for t

rade

libe

raliz

atio

n Democrats

Republicans

Hawley-Smoot TariffTrade ExpansionAct of 1962

NAFTA

CAFTA

Trade Act of 1970

Colombia

20

• SANDERS: I voted against NAFTA, CAFTA, PNTR with China. I think they have been a disaster for the American worker. A lot of corporations that shut down here move abroad. Working people understand that after NAFTA, CAFTA, PNTR with China we have lost millions of decent paying jobs. We're in a race to the bottom, where our wages are going down. Is all of that attributable to trade? No. Is a lot of it? Yes. TPP was written by corporate America and the pharmaceutical industry and Wall Street.

• Q: So basically, there's never been a single trade agreement this country's negotiated that you've been comfortable with?

• SANDERS: That's correct.

Myths

• Tariff as cause of Civil War

• Protectionism made America great

• Smoot-Hawley “caused” the Great Depression

• Massive post-World War II tariff give away

Episodes

• Jefferson’s trade embargo (December 1807 – March 1809)

• Tariff of Abominations (1828)

• Smoot-Hawley tariff (1930)

Tariff of Abominations (1828)

Willis Hawley & Reed Smoot

• Politicians using interests, not interests using politicians

Downward Spiral of World Trade

Cordell Hull Secretary of State 1933-44

"I will never falter in my belief that enduring peace and the welfare of nations are indissolubly connected with friendliness, fairness, equality and the maximum practicable degree of freedom in international trade."

33

Current disenchantment

• Renewed partisan conflict in post-Cold War era• Lost link to foreign policy

• Increased trade with developing countries• NAFTA and the “China shock”

• Declining employment in manufacturing*

• Consequence → increased partisanship over trade

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

1860 1880 1900 1920 1940 1960 1980 2000

Part

isan

ship

Inde

x

Hawley-Smoot

NAFTA

CAFTA

Trade Expansion Act

RTAA

Bipartisan consensus

KoreaColombia

Return of Joseph Wharton?

Four eras?

1. Revenue (1790-1860)

2. Restriction (1860-1934)

3. Reciprocity (1934-present)

4. Retreat (2017-?)

39

Conclusions

• Trade has always* been a source of domestic political conflict

• Partisan conflict renewed in the post-Cold War era

• Strong status quo bias in the system