(July 1, 2019) Anyone with even a casual interest in Trump’s tariff has noticed that farmers are complaining.
Food, beverages and feed are America’s biggest exports. Soybeans and pork are major items sent to China. Since both have been slapped with retaliatory Sino tariffs, American producers are losing the market to other countries such a Brazil. Consequently, President Trump assembled a $16 billion farmer bailout package, to be funded by the tariffs collected for industrial products like steel and aluminum.
Here are the lessons:
- Most historians analyzing the tariff as a cause of the Civil War don’t consider the negative affect on the demand for exported farm goods. Instead they only consider the duties as uniformly applied throughout the country. This leads them to reason that the North paid most of the tariffs because it had a greater population.
- They fail to consider that protective tariffs on manufactured goods caused the Europeans to buy less farm goods from America. They could not generate the exchange credits needed to buy American agriculture products unless they could sell their manufactured items into our country. High tariffs impeded that.
- As the dominant exporter of agricultural products (cotton and tobacco) the demand for Southern produce was disproportionately penalized. Unlike today’s soybean farmers who might be located anywhere from Wisconsin to Mississippi, the antebellum South was the America’s largest export region by a wide margin.
- As a result, Southerners were trebely penalized by tariffs on manufactured items. First, they had to pay the tariff on the imported products they bought. Second, they had to pay an artificially higher price for domestic substitutes because those selling prices were inflated by the tariff. Three, they lost income as sales of their farm goods were constrained by the lower demand overseas caused by the American tariffs.
- Unlike today’s soybean and pork farmers, the antebellum Southern farmers had no federal bailout. Thus, the government subsidized the Northern manufacturers with tariffs but made no compensation to Southern farmers for their lost sales. This was a big deal. It is why South Carolina nullified the Tariff of Abominations in 1832.
- The U. S. Constitution specified that all taxes should be “uniform.” Northerners believed that “uniform” meant only that tariffs on each item should be the same (within its class) regardless of where it was purchased. Southerners had a more liberal interpretation. “Uniform,” they argued, should mean that the economic impact will not discriminate against any state or region. As the Trump tariffs show, the adverse result is focused on agriculture. In antebellum America that constituted regional discrimination because so much of the farm exports came from the South. Even though the economic affect was disproportionately negative on the South, they got nowhere with the argument politically.
In sum, America’s agricultural exports have always been a casualty of protective tariffs on industrial products. While the harmful impact is more spread out geographically today, in antebellum America it was concentrated in the South.
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