Protective Tariffs

Definition

Protective tariffs are taxes imposed on imported goods with the intent to protect domestic industries from foreign competition. By raising the price of imported goods, these tariffs encourage consumers to buy domestically produced products, supporting local businesses and jobs. This economic strategy played a significant role in shaping national policies and regional relationships throughout American history.

5 Must Know Facts For Your Next Test

1. The first protective tariff in the United States was enacted in 1789, aimed primarily at protecting American manufacturers after independence.
2. In the early 19th century, tariffs were a contentious issue, often dividing the North, which favored protectionism, and the South, which opposed it due to their reliance on imported goods.
3. The Tariff of 1828, known as the 'Tariff of Abominations,' led to significant conflict between states and was a major factor in the Nullification Crisis in South Carolina.
4. Protective tariffs were a key component of Henry Clay's American System, which sought to promote economic growth through infrastructure development and manufacturing.
5. The use of protective tariffs increased during the Civil War as the federal government sought to finance the war effort and boost Northern industrial production.

Review Questions

• How did protective tariffs influence the establishment of a national economic system in early America?
  • Protective tariffs were vital in establishing a national economic system by promoting domestic industries and reducing dependence on foreign goods. They encouraged manufacturing growth, especially in the North, leading to economic diversification. This shift supported the emergence of a cohesive national economy, paving the way for future industrialization and economic policies that aimed at fostering American self-sufficiency.
• Evaluate how protective tariffs contributed to regional economic divergence and tensions between the North and South during the early republic.
  • Protective tariffs created significant regional economic divergence as they benefitted Northern manufacturers while burdening Southern consumers reliant on imported goods. The South viewed these tariffs as discriminatory and economically harmful, leading to rising tensions that manifested in political disputes and conflicts like the Nullification Crisis. This division exacerbated sectional interests and contributed to a growing rift between Northern industrialization and Southern agrarianism.
• Assess the role of protective tariffs in the economic factors leading up to the Civil War and their implications for both sides.
  • Protective tariffs were central to the economic factors leading up to the Civil War by fueling regional tensions and ideological divides. The North supported these tariffs as a means of bolstering their industrial economy, while the South opposed them as detrimental to their agricultural interests. This conflict over trade policy highlighted broader issues of state rights versus federal authority and ultimately contributed to secessionist sentiments that precipitated the war.

Related terms

Import Duties: Taxes collected on goods brought into a country, typically used as a revenue source for the government and to regulate trade.

Subsidies: Financial support provided by the government to domestic industries to enhance their competitiveness against foreign imports.

Trade Balance: The difference between the value of a country's exports and imports, influencing economic stability and growth.