The Tariff Act of 1890, commonly called the McKinley Tariff, was an act of the United States Congress, framed by Representative William McKinley, that became law on October 1, 1890.The tariff raised the average duty on imports to almost fifty percent, an act designed to protect domestic industries from foreign competition; protectionism, a tactic supported by Republicans, was fiercely debated by politicians and condemned by Democrats.
William McKinley was the 25th president of the United States, serving from March 4, 1897, until his assassination six months into his second term. McKinley led the nation to victory in the Spanish–American War, raised protective tariffs to promote American industry and kept the nation on the gold standard in a rejection of free silver.
A tariff is a tax on imports or exports between sovereign states. It is a form of regulation of foreign trade. It is a policy that taxes foreign products to encourage or protect domestic industry. The tariff is historically used to protect infant industries and to allow import substitution industrialization.
Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents claim that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general, and harm the producers and workers in export sectors, both in the country implementing protectionist policies, and in the countries protected against.
The McKinley Tariff was replaced with the Wilson–Gorman Tariff Act in 1894, which lowered tariff rates.
The Revenue Act or Wilson-Gorman Tariff of 1894 slightly reduced the United States tariff rates from the numbers set in the 1890 McKinley tariff and imposed a 2% tax on income over $4,000. It is named for William L. Wilson, Representative from West Virginia, chair of the U.S. House Ways and Means Committee, and Senator Arthur P. Gorman of Maryland, both Democrats.
After 450 amendments, the Tariff Act of 1890 was passed and increased average duties across all imports from 38% to 49.5%.McKinley was known as the "Napoleon of Protection," and rates were raised on some goods and lowered on others, always in an attempt to protect American manufacturing interests. Changes in duties for specific products such as tinplates and wool were the most controversial ones and were emblematic of the spirit of the Tariff of 1890.
The Act eliminated tariffs altogether on certain items, with the threat of reinstatement as an enticement to get other countries to lower their tariffs on items imported from the US.
The Act removed tariffs on sugar, molasses, tea, coffee and hides but authorized the President to reinstate the tariffs if the items were exported from countries that treated U.S. exports in a "reciprocally unequal and unreasonable" fashion. The idea was "to secure reciprocal trade" by allowing the executive branch to use the mere threat of reimposing tariffs as a means to get other countries to lower their tariffs on U.S. exports. Although that delegation of power had the appearance of being an unconstitutional violation of the nondelegation doctrine, it was upheld by the Supreme Court in Field v. Clark in 1892, as it authorizing the executive to act merely as an "agent" of Congress, rather than a lawmaker itself.The President did not use the delegated power to re-impose tariffs on the five types of imported goods, but he used the threat of doing so to pass 10 treaties in which other countries reduced their tariffs on U.S. goods.
The doctrine of nondelegation is the theory that one branch of government must not authorize another entity to exercise the power or function which it is constitutionally authorized to exercise itself. It is explicit or implicit in all written constitutions that impose a strict structural separation of powers. It is usually applied in questions of constitutionally improper delegations of powers of any of the three branches of government to either of the other, to the administrative state, or to private entities. Although it is usually constitutional for executive officials to delegate executive powers to executive branch subordinates, there can also be improper delegations of powers within an executive branch.
Tin-plates were a major import for the United States; tens of millions of dollars in these goods entered the country each year.In the preceding 20 years, tariff rates had been raised and dropped multiple times on tin-plates with no change in import levels, and domestic production had remained inconsequential. In a last attempt to stimulate the infant domestic tin-plate industry, the Act raised the duty level from 30% to 70%. It also included a unique provision that stated tin-plates should be admitted free of any duty after 1897 unless domestic production in any year reached one third of the imports in that year. The goal was for the duty to be protective or not to exist at all.
In economics, an infant industry is a new industry, which in its early stages experiences relative difficulty or is absolutely incapable in competing with established competitors abroad.
The new tariff provisions for wool and woolen goods were exceedingly protectionist. Wool was previously taxed based on a schedule: more valuable wool was taxed at a higher rate. Through a multitude of complicated tariff schedule revisions, the Act made almost all woolen goods subject to the maximum duty rate.
Wool is the textile fiber obtained from sheep and other animals, including cashmere and mohair from goats, qiviut from muskoxen, from hide and fur clothing from bison, angora from rabbits, and other types of wool from camelids; additionally, the Highland and the Mangalica breeds of cattle and swine, respectively, possess wooly coats. Wool consists of protein together with a few percent lipids. In this regard it is chemically quite distinct from the more dominant textile, cotton, which is mainly cellulose.
Also, the Act increased the tariff on carpet wool, a wool of very low quality not produced in the US. The government wanted to ensure that importers were not declaring higher-quality wool as carpet wool to evade the tariff.
The tariff was not well received by Americans who suffered a steep increase in the cost of products. In the 1890 election, Republicans lost their majority in the House with the number of seats they won reduced by nearly half, from 171 to 88.Also, in the 1892 presidential election, Harrison was soundly defeated by Grover Cleveland, and the Senate, House, and Presidency were all under Democratic control. Lawmakers immediately started drafting new tariff legislation, and in 1894, the Wilson-Gorman Tariff passed, which lowered US tariff averages.
The tariff was poorly-received also abroad. Protectionists in the British Empire used it to argue for tariff retaliation and imperial trade preference.
Tariffs (taxes on foreign goods entering a country) served two purposes for the United States in the late 19th century. One was to raise revenue for the federal government, and the other was to protect domestic manufacturers from foreign competition, known as protectionism.
In December 1887, President Grover Cleveland, a Democrat, devoted his entire State of the Union Address to the issue of the tariff and called emphatically for the reduction of duties and the abolition of duties on raw materials. The speech succeeded in making the tariff and the idea of protectionism a true party matter. In the 1888 election, the Republicans were victorious with the election of Benjamin Harrison and majorities in both the Senate and the House. For the sake of holding the party line, the Republicans felt obligated to pass stronger tariff legislation.
William McKinley, of Ohio, was defeated by Thomas Brackett Reed to be Speaker of the House after the 1888 elections.McKinley instead became chairman of the House Ways and Means Committee and was responsible for framing a new tariff bill. He believed that a protectionist tariff had been mandated by the people through the election and that it was necessary for America's wealth and prosperity.
In addition to the protectionist debate, politicians were also concerned about the high revenue accruing from tariffs.After the American Civil War, tariffs remained elevated to raise revenue and to cover the high costs of the war. However, in the early 1880s, the federal government was running a large surplus. Both parties agreed that the surplus needed to lessen but disagreed about whether to raise or to lower tariffs to accomplish the same goal.
The Democrats' hypothesis stated that tariff revenue could be reduced by reducing the tariff rate. Conversely, the Republicans' belief was that by increasing the tariff, imports would be lessened, and total tariff revenue would drop. The debate would be known as the Great Tariff Debate of 1888.
Douglas Irwin's 1998 paper examines the validity of the opposite tariff hypotheses posed by the Republicans and Democrats in 1890. Irwin looked at historical data to estimate import demand elasticities and export supply elasticities for the US in the years before 1888. He then calculated that tariffs had not reached the maximum revenue rate and that a reduction, not a raise, in the tariff would have reduced revenue and the federal surplus. That confirmed the Democrats' hypothesis and refuted the Republicans'.
After he examined the actual tariff revenue data, he concluded that revenue decreased by about 4% from $225 million to $215 million, after the Tariff of 1890 increased rates. Irwin explains that to be due to a provision for raw sugar be moved to the duty-free list. Sugar was then the item that raised the most tariff revenue and so making it duty-free reduced revenue. If sugar is excluded from import calculations, the tariff revenue increased by 7.8%, from $170 million to $183 million.
Irwin concluded that the tariff hastened the development of domestic tinplate production by about a decade but also that the benefit to the industry was outweighed by the cost to consumers.
The Tariff Act of 1930, commonly known as the Smoot–Hawley Tariff or Hawley–Smoot Tariff, was an Act implementing protectionist trade policies sponsored by Senator Reed Smoot and Representative Willis C. Hawley and was signed into law on June 17, 1930. The act raised U.S. tariffs on over 20,000 imported goods.
The Tariff of 1828 was a protective tariff passed by the Congress of the United States on May 19, 1828, designed to protect industry in the northern United States. Created during the presidency of John Quincy Adams and enacted during the presidency of Andrew Jackson, it was labeled the "Tariff of Abominations" by its southern detractors because of the effects it had on the antebellum Southern economy. It set a 38% tax on 92% of all imported goods.
The Walker Tariff was a set of tariff rates adopted by the United States in 1846. The Walker Tariff was enacted by the Democrats, and made substantial cuts in the high rates of the "Black Tariff" of 1842, enacted by the Whigs. It was based on a report by Secretary of the Treasury Robert J. Walker. The Walker Tariff reduced tariff rates from 32% to 25%; it coincided with Britain's repeal of the Corn Laws and led to an increase in trade. It was one of the lowest tariffs in American history.
The Morrill Tariff of 1861 was an increased import tariff in the United States, adopted on March 2, 1861, during the administration of President James Buchanan, a Democrat. It was the twelfth of seventeen planks in the platform of the incoming Republican Party, which had not yet been inaugurated, and it appealed to industrialists and factory workers as a way to foster rapid industrial growth.
The Dingley Act of 1897, introduced by U.S. Representative Nelson Dingley, Jr., of Maine, raised tariffs in United States to counteract the Wilson–Gorman Tariff Act of 1894, which had lowered rates. Came into effect under William McKinley the first year that he was in office. The McKinley administration wanted to slowly bring back the protectionism that was proposed by the Tariff of 1890.
The Fordney–McCumber Tariff of 1922 was a law that raised American tariffs on many imported goods to protect factories and farms. The US Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade by providing huge loans to Europe. That, in turn, bought more US goods.
Free trade is a trade policy that does not restrict imports or exports; it is the idea of the free market as applied to international trade. In government, free trade is predominantly advocated by political parties that hold liberal economic positions, while economically left-wing and nationalist political parties generally support protectionism, the opposite of free trade.
The Report on the Subject of Manufactures, generally referred to by its shortened title Report on Manufactures, is the third major report, and magnum opus, of American founding father and first U.S. Treasury Secretary Alexander Hamilton. It was presented to Congress on December 5, 1791.
The Tariff of 1842, or Black Tariff as it became known, was a protectionist tariff schedule adopted in the United States to reverse the effects of the Compromise Tariff of 1833. The Compromise Tariff contained a provision that successively lowered the tariff rates from their level under the Tariff of 1832 over a period of ten years until the majority of dutiable goods were to be taxed at 20%. As the 20% level approached in 1842, industrial interests and members of the Whig Party began clamoring for protection, claiming that the reductions left them vulnerable to European competition. The bill restored protection and raised average tariff rates to almost 40%.
The Tariff of 1857 was a major tax reduction in the United States that amended the Walker Tariff of 1846 by lowering rates to between 15% and 24%.
The Revenue Act of 1913, also known as the Tariff Act, the Underwood Tariff, the Underwood Act, the Underwood Tariff Act, or the Underwood-Simmons Act, re-imposed the federal income tax after the ratification of the Sixteenth Amendment and lowered basic tariff rates from 40% to 25%, well below the Payne-Aldrich Tariff Act of 1909. It was signed into law by President Woodrow Wilson on October 3, 1913 and was sponsored by Alabama Representative Oscar Underwood.
The Tariff of 1816, also known as the Dallas Tariff, is notable as the first tariff passed by Congress with an explicit function of protecting U.S. manufactured items from overseas competition. Prior to the War of 1812, tariffs had primarily served to raise revenues to operate the national government. Another unique aspect of the tariff was the strong support it received from Southern states.
The tariff history of the United States spans from 1789 to present. The first tariff law passed by the U.S. Congress, acting under the then-recently ratified Constitution, was the Tariff of 1789. Its purpose was to generate revenue for the federal government, and also to act as a protective barrier around newly starting domestic industries. An Import tax set by tariff rates was collected by treasury agents before goods could be unloaded at U.S. ports.
In United States tax law history, the Tariff of 1883, also known as the Mongrel Tariff Act by its critics, reduced high tariff rates only marginally, and left in place fairly strong protectionist barriers.
Protectionism in the United States is protectionist economic policy that erected tariff and other barriers to trade with other nations. This policy was most prevalent in the 19th century. It attempted to restrain imports to protect Northern industries. It was opposed by Southern states that wanted free trade to expand cotton and other agricultural exports. Protectionist measures included tariffs and quotas on imported goods, along with subsidies and other means, to ensure fair competition between imported goods and local goods. In today's age the US is still highly protectionist, according to Global Trade Alert the US has adopted over 1000 protectionist measures since the Global Economic Crisis in 2008, more than any other country since.
Protective tariffs are tariffs that are enacted with the aim of protecting a domestic industry. They aim to make imported goods cost more than equivalent goods produced domestically, thereby causing sales of domestically produced goods to rise; supporting local industry. Tariffs are also imposed in order to raise government revenue, or to reduce an undesirable activity. Although a tariff can simultaneously protect domestic industry and earn government revenue, the goals of protection and revenue maximization suggest different tariff rates, entailing a tradeoff between the two aims.
Australian governments, both those of the colonies after the introduction of responsible government in 1850 and those in the federation after 1901, have been democracies in which the power to fix and change tariff rates has resided in the legislatures. A majority vote of members in the Lower House has fixed tariff rates when, from time to time, a tariff bill is put before them.