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"If the South did establish a free trade zone then what would prevent the North from slapping a tariff on goods imported from the confederacy?

Let's think about that. (Which you might have been well-advised to do before posting.)

Who would pay this tariff? Northerners not Southerners. What would be its effect? Southern goods (cotton goods in particular) would have been scarcer and more costly in the North. Southern sales lost as a result could probably be made up in Europe where the purchasing power of revenue from sales would have increased greatly due to Southerners no longer having to pay the exhorbitant tariff on goods purchased and imported from Europe. If the South sold more in Europe and and less in the North they would also buy more in Europe and less in the North. The North was far more dependent on markets in the South than the South was on markets in the North.

All in all, I don't think "slapping a tariff" on goods imported from the South would have been a very smart move for the North.

I would advise you to think as well because you have missed the point entirely. The south in 1861 was, by choice mind you, an agricultural society. You produced raw cotton, raw tobacco, rice, naval stores and very little else. You exported your produce to Europe or sent it up north and you bought virtually all your manufactured goods from up north. Direct imports to the south were relatively small in total volume. So the North would no doubt continue to buy your cotton because, after all, it was vital to their textile industries. They would probably import it duty free, too, because they had no cotton farmers to protect. So in that life would no doubt continue as before. But when you talk of a free trade zone, importing European good duty free and sending them north then your scheme starts to make no sense. Why would the North slap a tariff on manufactured goods imported through Boston and then stand back and allow those same goods to be sent to New Orleans and floated up the Mississippi duty free? The answer is obvious. They would not. If the north had a 50% duty on imported steel then they would collect that no matter where it came in at. So your threat of a southern free trade zone is no threat at all. All you would be doing would be removing a source of revenue for funding your government and that's my question all along. Where would the south get their revenue for the government if they didn't impose tariffs?