Despite their image as free traders, six leading British classical and neoclassical economists formulated a valid theoretical argument for tariffs. They showed that a suitably small tariff could, under certain conditions, benefit the levying country by improving its terms of trade. They also stressed the insuperable practical difficulties of implementing such optimum tariffs. These difficulties plus the likelihood of foreign retaliation convinced them that free trade was the best policy after all.
Our Research Focus: Monetary History