In the Early Twentieth Century, Joseph Chamberlain was traveling across Britain trying to rally support for Imperial Preference over Free Trade. I'm just wondering, speaking both Economically and in Foreign Policy what are the different arguments for the two? I know for instance that Free Trade advocates spoke of a rise in the price of bread, while Imperial Preference advocates spoke of strengthening the Empire. But more fundamentally like British Exports, Market Access, the strength of the Pound, military expenditure etc. What are the effects?
And which would you say is better for the British?
Kvasir
It partly depends on the details but overall, in a protectionist world Britain lost out by sticking to free trade, IMHO. You can get cheaper goods in the shorter term via free trade but if it means that foreign products make deep inroads into your home markets because their own markets are heavily protected you lose out in the shorter term. Also the difficultly of having a secure home market discourages investment in local production. Not saying its the only reason but it was in the short-term interests of British manufacturers to keep using old equipment rather than invest a lot of money in new factories because they were less certain of it being worthwhile.
Its not just a case of the home market. If your got a more secure home market it can enable economies of scale in the exporting. Also there may be political gains. Both Canada and Australia when they became independent introduced tariffs, including against British goods, as at some point did India. If you got the sort of Imperial Federation that Chamberlain wanted it may well be acceptable to the dominions because, while they face competition from British industry they also get access to the British home and imperial market [which they got for free OTL] while still having protection against other competitors while developing their own industries.
Similarly there was a case in the 1st decade of the 20thC when Japan made deals with various trading powers, allowing increased access to their own markets in return for improved access for them to the other powers markets. Britain, at the time, Japan's only real ally complained that the Japanese were making no such deals with them, giving her rivals a favourable position compared to Britain in the Japanese market. The Japanese responded that this was because Britain had nothing to offer in return as Japan already had full access to British markets. Ultimately Japan did make some concessions to keep good relations with Britain, but less than access given to other powers and it showed the problem that British trade faced. One big bonus for a British/Imperial tariff system might be that it could be used to make 1-1 deals with other powers to get improved access to their own markets.
Furthermore a balanced tariff system can supply funds. Even the Americans, who had probably the highest tariffs of any industrial power, hence the biggest deterrent to foreign imports, funded much of the federal budget from tariffs. [Partly this was possibly because they had a relatively small national budget, largely because of their small military spending]. However with a moderate level of tariffs you can both give your own business a bonus in the home market and at the same time generate useful revenue, while still keeping some imports to keep your own business on their toes. This revenue could be used to help investment, either directly in say transport facilities or education, or by lowering other taxes.
Another matter is what sort of tariff is planned. For instance you mention the price of bread. This was important because when free trade 1st became British policy in ~1848 the main tariffs had been on foodstuff, to support British farmers, mainly dominated by the large aristocratic estates, which meant dearer food for the ordinary people, including the growing numbers of urban workers. [Politically important initially not so much because many of them had the vote then as because lower food prices meant less demand for higher wages and hence cheaper production for factory owners]. However I think by ~1900 the main concern would be on tariffs on industrial goods. Probably no need or desire for tariffs on food imports other than possible to achieve some deal with Canada and Australia say for a wider tariff policy.
The down side of tariffs is that they can be seem as featherbedding producers, giving them less incentive to produce more efficiently. I think the key thing here is to avoid tariffs becoming too high, to prevent external competition being cut off totally and to prevent any monopoly or cartel to ensure a multiple of internal competitors. [One of Britain's traditional short-coming in the 20thC, a large number of small producers, would have been transformed with tariffs as you could have had a high degree of internal competition without them being swamped by large foreign firms being able to dump goods from protected markets]. Basically, as in so many other things its a case of the Golden Mean. Ideally you might also have an explicit agreement between government and producers in various areas that in return for tariff protection to ensure a market for the goods a degree of investment in new capacity would be agreed.
Sorry this is rather lengthy but potentially its a long and complex question. However hopefully you will see why in Joe Chamberlain's time I would have supported him on fair trade rather than free trade.
Steve