The Flexible Tariff System

October 11, 1927

Report Outline
Early History of Tariff Commission
Origin of the Flexible Tariff
Provisions of Flexible Tariff Law
Administration of the Flexible Tariff
Tariff Commission's Sugar Investigation
Proposed Changes in Flexible Tariff System

The Fordney-McCumber tariff act was signed by the President September 21, 1922, and has now been in effect a little over five years. The average life of the six tariff acts adopted during the preceding 40 years was six and a half years.

The present act was framed during a period of uncertainty as to the nature and extent of the foreign competition American producers would be called upon to meet during the immediately ensuing years. Its rates were fixed at a high level, but there was doubt in certain cases whether they would prove adequate to achieve the protective purpose of Congress. At the same time it was conceded that in certain other cases the rates might prove in practice to be too high, and to impose an undue burden upon consumers. It was therefore provided in the act that the President should be given authority to raise or lower the rates on specific commodities—within certain maximum and minimum limitations—by the amounts shown in Tariff Commission investigations to be necessary to “equalize the differences in costs of production in the United States and the competing foreign countries.”

The Fordney-McCumber act was notable both for the discretionary powers thus conferred upon the President, under its flexible tariff provisions, and for the explicit statement, appearing for the first time on the statute book, that the underlying principle of the legislation was that of equalizing foreign and domestic production costs. It was believed by the authors of the flexible tariff plan that prompt adjustment of rates by the President, in accordance with the cost of production rule, would operate to postpone the public demand for a general tariff revision by Congress, which was otherwise to be expected within a relatively short period.

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