Protective Tariff and the Assertions of Henry Clay

ProtectiveTariff and the Assertions of Henry Clay

Tariff andProtective Tariff

A tariff is a duty charged on the exports or imports of goods andservices. It is a fee that applies to products that enter or leave anation. Governments introduce tariffs to function as revenue sources,safeguard recently founded domestic industries, and dealing withunfavorable business practices. A protective tariff, on the otherhand, is a duty, tax, fee or a form of import charge placed by anational government on foreign goods and services. This tariffintends to protect domestic markets or industries of a nation fromforeign competition rather than serving as the source of revenuecollection. The duty allows a nation to stimulate domestic industriesand protect important elements such as security from foreign nations.Relations between United States and Britain continued to be unstableafter the War of 1812, which led to unreliable movement of consumergoods especially imports. Congress agreed to foster domesticproduction over importation of goods and services from countries suchas Britain. Thus, it passed a protective tariff meant to ensure thatnewly established firms survived, which eventually supported tonurture the industries, but hurt consumers.

Proposing andOpposing Protective Tariff

People supporting the introduction of this form of import duty assertthat it guards domestic services and goods from foreign influencesand competition. Imposing the duty increases the prices of importedgoods thereby discouraging resident consumers from purchasing theforeign goods. This system, therefore, encourages consumption ofdomestic products that in the process sustains local industries.Moreover, the duty guards fledgling firms that cannot effectivelycompete with reputable foreign firms. Although the Constitutionprevented taxes on exports, it allowed this form of import duty,which most northerners saw as a means of developing and shielding theAmerican industries.

People opposing the fees contend that the tariffs lead to increasedprices, which hurt consumers. Imposition of the fee would increasethe prices of the products and services exported to other countriesthus discouraging exporters from sending more goods thereby slowingtheir economic growth. Moreover, countries targeted may imposesimilar tariffs, which significantly hamper trade. In this regards,the southerners opposed the tariff since they imported largequantities of manufactured goods. The southerners felt that sincevery little production took place in the south and the northernersderived much income from the introduced tariff, the tariffs wereunfair and unnecessary.

Henry ClayResponse on Protective Tariff Criticism

The issue of the protective tariff contributed greatly to thetwo-party structure of governance with Henry Clay emerging as thechampion of the tariff. Henry Clay answered to the criticism that thetariff benefited some people at the expense of others by explaininghow the system benefited both the Northerners and the Southerners.Clay saw the tariff as a means through which the north and the southwould help each other through purchases of raw materials or finalproducts. According to Clay, the revenue collected from theSoutherners would enable the Northerners to purchase farm inputs fromthe South and West (1). The West and South would, therefore, equallybenefit from the sales of the farm inputs. Also, the tariff wouldgenerate federal government funds for construction of infrastructureused by both the South and West thus benefiting every party. Claypostulated that the United States had a great diversity of welfareand interests and that the good of each interest such asmanufacturing, agriculture, and commerce, as well as, the wholeshould be prudently consulted. Thus, he argued that stimulatingmanufacturing would create demand for raw materials, which would leadto more production and eventually economic growth, which wouldbenefit all Americans.

WorksCited

Clay, Henry.American System” Annals of Congress, 1824.Print.