James Madison Would Like a Few Words on Trade WarsRoundup
tags: James Madison, Trade, Trump, Trade War, Tariffs
President Donald Trump says trade wars are easy to win, but that hasn’t always been true in U.S. history. To the contrary, for the first 40 years of the republic, the founders struggled desperately to establish international trade agreements that Americans would find acceptable. The need for trade leverage was the first factor motivating James Madison to call for a new Constitution. And trade wars had a way of turning into shooting wars. The War of 1812, the first declared war in U.S. history, was the result of a trade fight that the Americans seemed unable to win with economic sanctions alone.
The key to understanding the founders’ struggles with trade is to realize that in the 18th century, empires worked a lot like multinational free-trade agreements do in the modern world. Different parts of the British Empire could trade freely with each other, but not with the French or Spanish empires.
So when the U.S. declared independence in 1776, the founders were undertaking a kind of proto-Brexit. The British, deeply displeased with the rebellion, cut off access to British ports. After the Revolutionary War was over, the U.S. found itself struggling to regain access.
“What is to be done?” Madison asked James Monroe rhetorically in a letter he wrote in April 1785. “Must we remain passive victims to foreign politics; or shall we exert the lawful means which our independence has put into our hands, of extorting readdress?” Madison was proposing “retaliating regulations of trade”: In short, a trade war to force the British to allow American shipping to British ports.
The problem was that, under the Articles of Confederation, it was almost impossible to coordinate a single national trade policy. Even where Congress could agree on guidance, individual states, like Rhode Island, could deviate from tariffs or export sanctions.
Madison’s solution to the trade war problem was to design a new, more effective government. “I conceive it to be of great importance that the defects of the federal system should be amended,” Madison wrote. The states “cannot long respect a government which is too feeble to protect their interests.” ...
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