Clashing Over Commerce: A History of U.S. Trade Policy
By Douglas A. Irwin.
University of Chicago Press, 2017.
Hardcover, 832 pages, $38.
Reviewed by Frank Filocomo.
The Trump years have thrust trade policy back into the national conversation for the first time since the NAFTA wars of the 1990s. Much of the rhetoric, both on the economic nationalist and pro-free trade sides of the argument, however, is myopic and reductionist: while the former camp repeats platitudes like “America First!” and “Mexico is taking our jobs!,” the latter cadre casually dismisses the hardships of America’s despondent rustbelt and is hostile to anything approximating government protection.
But, to properly understand the very nuanced history of U.S. trade policy, one must look to historical context. Douglas Irwin, who has written myriad essays and books on the economics and politics of trade, undertakes his most ambitious work: Clashing Over Commerce: A History of U.S. Trade Policy. To be clear, this is not just another book about trade policy; it is an authoritative tome of remarkable breadth, one that will undoubtedly be cited for decades to come.
Irwin, covering over 250 years of trade policy, first walks readers through the incongruous economic practices of the thirteen colonies, before national trade policy existed. During the time of the Articles of Confederation, individual colonies dictated their own policies on trade. The regional differences observed here foreshadow the next 150 years of U.S. trade policy, which was characterized, first and foremost, by local interests.
Today the discussion around trade is framed too often in ideological terms. It goes something like this: Trumpian economic nationalists believe, much like the erstwhile Republican Party of William McKinley and later Robert Taft, that American industry should be protected from the threat of unfettered foreign imports, whereas the real Republican Party of Ronald Reagan understands that free enterprise is the gateway to economic flourishing. This framing is overly simplistic and fundamentally misses the real center of American trade that has persisted since the eighteenth century: geography and local interests.
For most of American history, the geographical divisions have been clear-cut: the industrialized North, with its import-oriented industries, has preferred protective tariffs and other high trade barriers, while the agrarian South, which has always had a more export-oriented economy, has routinely opposed import duties. While Irwin is right to point out exceptions to this rule—such as the “migration of cotton textile production from New England to the South” in the mid-twentieth century, which resulted in some Southerners breaking from their orthodoxy of opposing tariffs—this story is far more accurate than the one reducing things to competing ideological factions.
That said, Irwin does acknowledge there have indeed been actors who were staunch believers in their respective economic visions: Henry Clay, pioneer of the “American System,” was dogmatic in his economic nationalism. He frequently admonished Congress that foreign imports would ravage domestic industry and that the only way to prevent the hemorrhaging of America’s manufacturing base was to impose substantial import duties on foreign goods.
Conversely, Cordell Hull, the country’s longest serving Secretary of State, was a fierce opponent of government protection. He believed that a dramatic reduction in trade barriers would, over time, facilitate world peace. Ultimately, his unrelenting battle against American protectionism was largely won during his lifetime.
Clay and Hull aside, Irwin’s focus is rightly on regional differences.
Another important point that Irwin repeats throughout the book is that, for much of American history, tariffs for government revenue were widely accepted among both high-tariff Northern Republicans and low-tariff Southern Democrats. Before the 1913 income tax, tariffs were the main source of revenue for the government. Thus, the central division was between those who favored revenue-only tariffs and those who sought to impose protective ones. This key point—that few from either party argued against tariffs for revenue—is too often left out of the conversation. Irwin, however, picks up all of these crucial details.
Moreover, it is surprising to note that many essays and books on U.S. trade policy overlook or outright omit the paradigmatic Reciprocal Trade Agreements Act (RTAA) of 1934. The RTAA, to which Irwin dedicates an entire chapter, “authorized the president to reduce import duties in trade agreements negotiated with other countries.” This momentous legislation, which is today totally obscure to most everyone, was passed by a Democrat-controlled government under Franklin Roosevelt’s presidency. It was, by and large, a response to the egregiously protectionist Smoot-Hawley tariff of 1930, that, according to Irwin, “contributed to the severe deterioration in trade relations in the early 1930s.”
The RTAA effectively ended the status quo of American trade policy dictated by lobbyists that sought protection for their respective industries and Congressional logrolling, by delegating tariff-making powers away from the legislature and to the executive. This meant that the days of Congress fastidiously combing through the tariff rates of individual goods—a process that was time-consuming, ineffective, and often resulted in economic inefficiencies—would be over. Now, Congress’s only responsibility regarding trade would be to renew the RTAA and regulate the powers of the President. While Republicans initially objected to the RTAA, they soon came around to it and spoke less about protection, and more about reciprocity. Before long, trade liberalization became a bipartisan norm.
Irwin focuses on the things that really matter when it comes to the politics around America’s ever-evolving and idiosyncratic history of trade policy: the divisions between the North and South, the political motivations behind tariffs for the country’s various constituencies, and the significant changes in procedural matters. Irwin, while touching on ideological motivation, does not get bogged down in the “nationalist vs. globalist” debate, for he knows well that, historically, these have never been the correct motivations behind protectionist and free-trade movements.
For the past several decades, one would be hard pressed to find scholarship that did not reference political scientist E. E. Schattschneider’s seminal work, Politics, Pressures and the Tariff. This book, published in 1935, captures first-hand accounts of political logrolling in favor of high tariffs and just how strong America’s import lobby was at the time. For those interested in developing a deeper understanding of the politics and political players that characterized much of our debates around trade policy, Schattschneider’s work is indispensable. That said, I think that Irwin—with his rich, rigorous, and thorough documentation of the past two centuries of American trade policy—has assumed the mantle of trade policy guru; he is the authority on the subject.
With more Trumpian tariffs likely to come in the following months, it is more important than ever that the electorate have a clear-eyed guide to follow, one that does not engage in fear mongering about the end of neoliberalism or the return to a mercantilist economic system, but that provides readers with ample context and useful anecdotes. Americans willing to dedicate the time to fully absorb and digest this extensive document will come away with a well-rounded comprehension of U.S. trade policy.
Frank Filocomo is the program manager at National Review Institute.
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