3.2 Rise of domestic and international trade

Early American trade routes shaped the young nation's economy. The Triangular Trade, coastal trade, and West Indies trade facilitated the exchange of raw materials, manufactured goods, and enslaved people. These routes fueled economic growth through commodities like tobacco, cotton, and sugar.

Factors driving trade growth included technological advancements, population growth, and agricultural surplus. British mercantilism influenced colonial production, while independence opened new opportunities. This expanding trade had far-reaching economic and political impacts on the developing United States.

Early American Trade Routes and Policies

Major trade routes and commodities

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• Triangular Trade connected North America, Europe, and Africa facilitated exchange of raw materials, manufactured goods, and enslaved people
• Coastal Trade linked New England to Southern colonies transported agricultural products and finished goods
• West Indies Trade connected North American colonies to Caribbean islands exchanged foodstuffs for sugar and molasses
• Primary Commodities fueled economic growth (tobacco, cotton, sugar, rum, enslaved people, manufactured goods)

Factors in trade growth

• Technological advancements improved shipbuilding techniques and developed canals and roads expanded transportation networks
• Population growth increased demand for goods and services stimulated production and trade
• Agricultural surplus enabled specialization and trade freed labor for other economic activities
• British mercantilism encouraged colonial production of raw materials shaped economic relationships
• Independence from Great Britain opened new trade opportunities allowed direct negotiations with other nations

Economic and Political Impacts of Trade

Consequences of increased trade

• Economic diversification grew manufacturing sector and expanded banking and finance institutions
• Regional specialization developed North focused on industrial goods while South concentrated on agricultural products
• Increased government revenue relied heavily on customs duties as major source of federal income
• Foreign policy implications necessitated trade agreements with European powers and led to conflicts over shipping rights
• Westward expansion driven by need for new agricultural lands reshaped territorial boundaries
• Class stratification saw rise of merchant class and widened wealth gap between social groups

Role of tariffs and policies

• Tariff Act of 1789 established first major legislation on import duties set precedent for future trade policies
• Hamilton's Report on Manufactures (1791) advocated for protective tariffs to support domestic industries
• Embargo Act of 1807 prohibited American ships from engaging in foreign trade aimed to protect neutral rights
• Non-Intercourse Act of 1809 replaced Embargo Act allowed trade with nations other than Britain and France
• Tariff of 1816 implemented first explicitly protective tariff supported infant industries
• Navigation Acts required use of American ships for certain trade routes promoted domestic shipping industry
• Free trade vs. protectionism debate divided nation North favored high tariffs while South opposed them