Reciprocal Trade Treaties

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The concept of reciprocity in international trade involves the adjustment of one nation's tariff rates in exchange for similar adjustments (or other trade concessions) from another nation.

The enactment of the McKinley Tariff in 1890 triggered swift retaliation by other countries. As rates were raised against American goods in foreign nations, Western and Southern farmers besieged Washington with complaints about their growing inability to sell produce abroad.

The Harrison administration began negotiations to blunt the impact of the McKinley rates in return for easing restrictions on American goods.

In their successful campaign of 1932, the Democrats argued in favor of a competitive tariff for revenue and reciprocal trade agreements with other nations. Congress approved an amendment to the Tariff Act of 1930 on June 12, 1934. Called the Trade Agreements Act, it authorized the President, whenever he finds that import restrictions by the United States or foreign countries are unduly burdening American foreign trade, to make agreement regarding foreign trade and to proclaim the changes in duties created under such agreements with two provisions. The existing rates could not be changed by more than 50% and the free list could not be modified. This made Senate ratification of such changes unnecessary.