High tariffs

Definition

High tariffs are taxes imposed by a government on imported goods, which make foreign products more expensive and less competitive compared to domestic products. In the context of industrialization, high tariffs were used by governments to protect their burgeoning industries from foreign competition, promoting economic growth and self-sufficiency.

5 Must Know Facts For Your Next Test

1. High tariffs were often enacted in the 19th century as part of protectionist policies to support growing industries in countries like Britain and Germany.
2. Countries with high tariffs experienced increased production in domestic industries as they became more shielded from international competition.
3. The use of high tariffs contributed to trade tensions between nations, especially when countries retaliated with their own tariff increases.
4. High tariffs can lead to higher prices for consumers as imported goods become more expensive, impacting the overall cost of living.
5. The Smoot-Hawley Tariff Act of 1930 is one of the most infamous examples of high tariffs leading to retaliatory measures and worsening global trade conditions during the Great Depression.

Review Questions

• How did high tariffs impact domestic industries during the period of industrialization?
  • High tariffs provided a protective barrier for domestic industries, allowing them to grow without facing overwhelming competition from foreign products. This led to an increase in production and job creation within those industries. By making imports more expensive, high tariffs encouraged consumers to buy locally produced goods, which helped stimulate economic development during a crucial time in history.
• Evaluate the long-term effects of high tariffs on international trade relations.
  • High tariffs often led to retaliatory actions from other countries, creating trade wars that could destabilize international relationships. In the long run, while they may have protected domestic industries in the short term, they could also hinder global trade growth and lead to economic isolation. This cycle of protectionism can create a negative feedback loop that ultimately harms both national and global economies.
• Analyze how high tariffs influenced social dynamics during the industrialization period.
  • The imposition of high tariffs not only shaped economic landscapes but also had profound social implications. As domestic industries flourished due to protective measures, new job opportunities emerged, leading to urban migration as workers sought employment in factories. However, this shift also created class tensions between industrial laborers and traditional agricultural communities, highlighting disparities in wealth and access to resources. Over time, these social dynamics contributed to labor movements and demands for reform in response to the changing economic conditions.

Related terms

Protectionism: An economic policy aimed at shielding domestic industries from foreign competition through the use of tariffs and other trade barriers.

Trade deficit: A situation where a country's imports exceed its exports, often leading to economic imbalances that can be addressed through tariff adjustments.

Industrial Revolution:

A period of significant industrial growth and technological innovation that began in the late 18th century and transformed economies from agrarian to industrial.