tariff: Trend toward Free Trade

Trend toward Free Trade

Since World War II the trend has been away from tariffs and in favor of freer trade. Through instruments such as the most-favored-nation clause and the reciprocal trade agreement, two nations may agree to lower their respective tariff barriers. More comprehensive agreements, such as those of the European Union and other customs unions, lower or even eliminate tariffs among groups of nations. Finally, the General Agreement on Tariffs and Trade (GATT) and its successor, the World Trade Organization (WTO), have since the 1950s sponsored a number of initiatives for lowering the customs duties of most major trading nations. The United States has participated in the movement toward freer trade by lowering its customs duties from the high rates of the Hawley-Smoot Tariff Act (1930); by playing an instrumental role in the several GATT tariff initiatives, including the Uruguay round (1986–93), which created the WTO; and by signing (1992) the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Under the Trump administration, however, the United States pursued a quasimercantalist approach to the balance of trade and imposed tariffs on a number of its major trading partners in an attempt to win trade concessions; the tariffs generally led to the imposition of equivalent foreign tariffs on U.S. trade.

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