Trade and Trade Policy

Colonial trade patterns were dictated by mercantilist doctrine, meaning that Britain’s New World colonies provided it with commodities and raw materials essential for the home market, while Britain exported manufactured goods in return. Under this system a triangular trade developed, which on the eve of the Revolution, mainland exports to Britain accounted for c. three-fifths of total exports, while the West Indies accounted for an additional quarter. The Revolution led to a radical reorientation of American trade. Britain and its West Indian colonies shares declined to under one-third and one-tenth of total exports, respectively. New markets opened up in northern and southern Europe that collectively accounted for the just under one-third of exports, while shipments to the non-British West Indies accounted for a further quarter. The commodity composition of American trade remained largely unchanged, although core commodity exports post-Revolution accounted for a larger share of the total. Independence allowed the American Republic to pursue trade on its terms. The policies adopted to that end sought to balance the need to support new domestic industries, while the importance customs revenues, which provided virtually the entire revenue needed to support Federal expenditure, argued in favour of relative low tariffs.