A Forensic Analysis of US Ad-Valorem and Legislated Tariff Rates, 1916-1933

The U.S. tariff schedules of the early 20th century are incredibly complex, running in many cases to over 5,000 tariff lines. Further complicating the picture is the use of three types of custom duties: pure ad-valorem, charging a percentage of the value imported; pure specific, charging a nominal levy per physical unit imported; and the combination of the two.  Given the volatility of both the nominal U.S. price level and relative prices during this period, much of the variation in the commonly used aggregate ad-valorem-equivalent rate is due not to legislative amendment but due to the nominal rigidity of the specific duties themselves. This has the potential to fundamentally confound legislative intent with effective rates of protection in the intervening years.

This paper follows the decomposition method of Crucini (1994) to parse line-item ad-valorem-equivalent rates of duty into their legislative, price level and relative price components. The tariff history that emerges is very different from what is commonly told. The comprehensive panel archive of line item tariffs and decomposition provide a more solid foundation for research on the positive and normative facets of interwar US tariff policies.

Paper Authors: 

Saunok Chakrabarty; Purdue University

Mario Crucini; Purdue University

James Harrison; United States Naval Academy