Starting in 1789, when the United States passed an impost to provide a national revenue, Thomas Jefferson and James Madison advocated a policy of discrimination in tariffs that would set higher customs duties for those countries that did not have a reciprocal trade agreement with the United States. The idea was that these nations would be so hurt economically that they would have to negotiate a commercial treaty. Great Britain was the target of the policy since that country became the United States's predominant trading partner after 1783 but refused to agree to a commercial treaty and would not officially open its West Indies possessions to U.S. shipping.

Madison and Jefferson believed that a policy of discrimination would strengthen the United States. As Madison explained in 1789, Great Britain had "bound us in commercial manacles and very nearly defeated the object of our independence." Discrimination would counter these economic restraints by encouraging the development of U.S. shipping and force the British to relax its navigation acts. Jefferson also hoped that it would allow for increased trade with France, with whom the United States had a commercial agreement. Alexander Hamilton opposed discrimination because it would hurt the overall revenue raised by the Treasury Department and might lead to British retaliation, which would stifle the export market.

The Tariff Act of 1789 established customs duties without discrimination, but the issue did not go away. As secretary of state, Jefferson advocated a policy of discrimination in a report in 1791 and pushed these ideas even further in his "Report on the Privileges and Restrictions on the Commerce of the United States in Foreign Countries" in 1793. Jefferson wrote: "Should any nation, contrary to our wishes, suppose it may better find its advantage by continuing its system of prohibitions, duties and regulations, it behooves us to protect our citizens, their commerce and navigation, by counter prohibitions, duties and regulations, also." He concluded: "Free commerce and navigation are not to be given in exchange for restrictions and vexations; nor are they likely to produce a relaxation of them." Despite some support in Congress, however, this policy was not implemented. The war between Great Britain and France that began in 1793 altered circumstances dramatically to increase overall trade carried in U.S. ships during the rest of the decade. Moreover, Jay's Treaty (1794), which established most-favored-nation status in trade with Great Britain but did not open up the British West Indies to uninhibited trade, was a refutation of discrimination. Later policy during the Jefferson and Madison administrations--such as the Non-Importation Act (1806), Embargo of 1807, Non-Intercourse Act (1809), and Macon's Bill Number 2 (1810)--that sought to use trade as a bargaining chip in diplomacy reflected the basic idea of discrimination.

Bibliography:

Drew R. McCoy, The Elusive Republic: Political Economy in Jeffersonian Virginia (Chapel Hill: University of North Carolina Press, 1980)

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