Tariff of 1816

The Tariff of 1816 was the first protective tariff in the American history which was introduced in 1816 in order to safeguard American industries from the threat of being wiped out by the relatively cheap imports. Prior to this instance, the tariffs were mostly imposed as a measure of collecting revenue - which the federal government eventually used to pay the outstanding debts of the nation. The Tariff of 1816, however, was more of a protective tariff - which was imposed to protect domestic industries from import competition.

Tariff of 1816 (AKA the Dallas Tariff)

The Tariff of 1816 was a protective tariff which raised the import duties on foreign goods by a significant margin in order to avoid the flooding of American markets by goods imported from Britain. It was known as the Tariff of 1816 as it was introduced in this particular year, and the Dallas Tariff as it was introduced in response to the report sent by Alexander J. Dallas - the then Treasury Secretary for the United States government. The tariff was eventually adopted at the 14th Congress during the 7th and 8th years of James Madison's presidency.

Why Was it Imposed?

During the War of 1812, the British industries continued to produce iron and textile goods and stock them in their warehouses. After the war, these goods were exported to the United States markets. As a result of their large-scale production and stocking, the prices of British goods came down by a significant margin, which made them cheaper compared to their American counterparts. When the American consumers turned their attention towards the relatively cheap British goods, the then American President - James Madison, along with Henry Clay (the then Speaker of the House,) came up with an economic plan which known as the 'American System' or the 'American Way' to save the American manufacturing units which were still in their infancy stage.

Based on the ideas of Alexander Hamilton, the American System put forth a plan of stimulating economic growth while doing away with the dumping of cheap foreign goods from Britain in the American market. As a part of this the protective Tariff of 1816, which was an important part of the American System, imposed high duties on the British goods in the American market. This resulted in price hike for the British goods which brought them at par with goods manufactured in the American industries, thus making the competition between the two even. As opposed to the existing revenue measures, this was the first actual protectionist measure in the United States - which developed with time.

Who Opposed it?

There was a mixed response for the Tariff of 1816 in the United States of America. The northern and western states - which had a strong industrial base, came out in support of this tariff. The southern states, on the other hand - which were more dependent on agriculture, were not quite pleased with the same. They were dependent on manufactured goods which had become costly as a result of this tariff. That was not the only reason which made the southerners oppose the Tariff. These agricultural states also had export ties with Britain - something which they thought would be affected if Britain retaliates to the American protectionist measure. If the British were to impose any such duties on American goods which were exported from the southern states, the southerners would have had to bear the brunt of this retaliation. Somewhat similar was the condition of merchants from the New England region, who were looking forward to restore trade relations with the European markets.

The protective Tariff of 1816 helped the American industries compete with the foreign goods in the domestic market. Acknowledging its significance, some notable southern politicians including the likes of Thomas Jefferson and John C. Calhoun came out in support of this tariff. Its significance was not just restricted to protection for the American industrial sector. It also formed a base for the Compromise of 1833 which brought an end to the Nullification Crisis of 1832 when the state of South Carolina, annoyed with the Tariff of Abominations (Tariff of 1828) and the Tariff of 1832, threatened to secede from the United States.