It has been argued -- for example, here -- that today's industrialized countries got that way (that is, industrialized) by using a tariff to protect their infant industries from foreign competition, and that by using trade agreements to prevent developing countries from doing the same, the industrialized countries are "kicking away" the development ladder. I don't think there's too much disagreement that there were high tariffs in today's industrialized countries during their development stage. The question, though, is whether these tariffs were a cause of industrialization. Here's Don Boudreaux suggesting an argument that they might not have been:
... throughout the 1800s tariff revenues were a major source of operating funds for Uncle Sam. But tariffs that could significantly reduce imports would also reduce government revenues. After all, the very purpose of a “protective tariff”—as opposed to that of a “revenue tariff”—is to dramatically decrease the occurrence of the thing being taxed: imports. (In the extreme case, even a very high tariff rate on imports yields no government revenue if that rate causes Americans to stop importing completely.)
He then asks:
I’m unaware of any historical research done on the following question: To what extent did Uncle Sam’s heavy reliance upon tariff revenues during the 19th century contribute either to (1) keeping tariffs from being more protective rather than being sources of government revenue; or (2) keeping the size of the national government smaller (than it would otherwise have been) by keeping Uncle Sam’s revenues lower (as a consequence of using tariffs to restrict imports rather than to raise revenue)?
Interesting questions. Were U.S. tariffs in the 19th century intended more for revenue or for protection? What balance was struck between these two goals? I'm curious about this, too.
Additional thoughts from Tim Worstall:
But while those tariffs were indeed rising to the McKinley peak transport costs were falling precipitately over the previous 50 years. The move from (for transatlantic) sail to steam lowered rates so much that, even despite tariff rises total trade barriers were falling. The evidence they use is that commodity prices converged over this time period, despite the rises in tariffs.
Is it possible that all the high U.S. tariffs during the 19th century were more about revenue than protection, and that any tariff increases simply offset lower transportation costs? What about other countries, such as Germany? Of course, even if tariffs are intended mostly for revenue, when they get to 50% or so, they have a pretty significant protective effect, regardless of what the main policy goal is.
