McKinley Tariff
Encyclopedia
The Tariff Act of 1890, commonly called the McKinley Tariff, was an act 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. The McKinley Tariff was replaced with the Wilson-Gorman Tariff in 1894, which promptly lowered tariff rates.
.
In December 1887, President Cleveland
, a Democrat, devoted his entire State of the Union Address
to the issue of the tariff. He called emphatically for the reduction of duties and the abolition of duties on raw materials. This 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 President 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 B. 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 Civil War, tariffs remained elevated to raise revenue and cover the high costs of 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 lower tariffs to accomplish the same goal. The Democrats' hypothesis stated that tariff revenue could be reduced by reducing the tariff rate. Conversely, Republicans believed that by increasing the tariff, imports would be lessened, and total tariff revenue would drop. This point, along with the dialogue surrounding protectionism, created what would be known as “The Great Tariff Debate of 1888.”
and woolen goods were exceedingly protectionist. Wool was previously taxed based on a schedule, meaning that 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. Further, the act increased the tariff on carpet wool, a wool of very low quality that is 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.
be moved to the duty free list. Sugar, at this time, was the item that raised the most tariff revenue, so making it duty free reduced this revenue. If sugar is excluded from import calculations, the tariff revenue increased by 7.8 percent from $170 million to $183 million.
The tariff was not well received by Americans who suffered a steep increase in the cost of products. In the 1890 election, Republicans House seats went from 166 to only 88. McKinley, the act’s framer and defender, was not reelected. 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 U.S. tariff averages.
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
raised the average duty on imports to almost fifty percent, an act designed to protect domestic industries from foreign competition. Protectionism
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
, a tactic supported by Republicans, was fiercely debated by politicians and condemned by Democrats. The McKinley Tariff was replaced with the Wilson-Gorman Tariff in 1894, which promptly lowered tariff rates.
Tariff Politics
Tariffs, taxes on foreign goods entering a country, served two purposes for the United States in the late 19th century. One was to raise fiscal revenue for the federal government, and the other was to protect domestic manufacturers from foreign competition. This controversial idea was known as protectionismProtectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
.
In December 1887, President Cleveland
Grover Cleveland
Stephen Grover Cleveland was the 22nd and 24th president of the United States. Cleveland is the only president to serve two non-consecutive terms and therefore is the only individual to be counted twice in the numbering of the presidents...
, a Democrat, devoted his entire State of the Union Address
State of the Union Address
The State of the Union is an annual address presented by the President of the United States to the United States Congress. The address not only reports on the condition of the nation but also allows the president to outline his legislative agenda and his national priorities.The practice arises...
to the issue of the tariff. He called emphatically for the reduction of duties and the abolition of duties on raw materials. This 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 President Harrison
Benjamin Harrison
Benjamin Harrison was the 23rd President of the United States . Harrison, a grandson of President William Henry Harrison, was born in North Bend, Ohio, and moved to Indianapolis, Indiana at age 21, eventually becoming a prominent politician there...
, 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
William McKinley
William McKinley, Jr. was the 25th President of the United States . He is best known for winning fiercely fought elections, while supporting the gold standard and high tariffs; he succeeded in forging a Republican coalition that for the most part dominated national politics until the 1930s...
, of Ohio, was defeated by Thomas B. 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 Civil War, tariffs remained elevated to raise revenue and cover the high costs of 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 lower tariffs to accomplish the same goal. The Democrats' hypothesis stated that tariff revenue could be reduced by reducing the tariff rate. Conversely, Republicans believed that by increasing the tariff, imports would be lessened, and total tariff revenue would drop. This point, along with the dialogue surrounding protectionism, created what would be known as “The Great Tariff Debate of 1888.”
Tariff Description
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 the act reflected this sentiment. It raised rates on some goods and lowered rates on others, always attempting to protect American manufacturing interests. Changes in duties for specific products such as tin-plates and wool were the most controversial, and emblematic of the spirit of the Tariff of 1890.Tin-plates
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 1890 tariff raised the duty level from thirty percent to seventy percent. The Act 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 the imports in that year. The goal was for the duty to be protective, or not exist at all.Wool
The new tariff provisions for woolWool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
and woolen goods were exceedingly protectionist. Wool was previously taxed based on a schedule, meaning that 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. Further, the act increased the tariff on carpet wool, a wool of very low quality that is 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.
Tariff Effects
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 United States in the years before 1888. With this information, he calculated that tariffs had not reached the maximum revenue rate, and therefore a reduction, not an increase, in the tariff would have reduced revenue and the federal surplus. His findings confirmed the Democrats' hypothesis, and refuted the Republicans'. However, after examining the actual tariff revenue data, it appears that revenue did decrease by about four percent from $225 million to $215 million after the Tariff of 1890 increased rates. Irwin explains that this is due to the Tariff of 1890’s provision that raw sugarSugar
Sugar is a class of edible crystalline carbohydrates, mainly sucrose, lactose, and fructose, characterized by a sweet flavor.Sucrose in its refined form primarily comes from sugar cane and sugar beet...
be moved to the duty free list. Sugar, at this time, was the item that raised the most tariff revenue, so making it duty free reduced this revenue. If sugar is excluded from import calculations, the tariff revenue increased by 7.8 percent from $170 million to $183 million.
The tariff was not well received by Americans who suffered a steep increase in the cost of products. In the 1890 election, Republicans House seats went from 166 to only 88. McKinley, the act’s framer and defender, was not reelected. 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 U.S. tariff averages.