Tariffs in the United States

The Hamilton Tariff of 1789 (enacted 1789-07-04) was the second statute ever enacted by the new United
States government. The new Constitution allowed only the federal government to levy tariffs, so the old
system of state rates disappeared. Most of the rates of the tariff were between 5 and 10 percent, depending on
the value of the item. As Secretary of the Treasury, Alexander Hamilton was anxious to establish the tariff as
a regular source of revenue for the government and as a protection of domestic manufacture. The former was
of immediate necessity; the latter was not. Instead, it established the principle of protectionism that was to
become a persistent political dispute throughout the next century and a half.

The Tariff of 1816 was put in place after the War of 1812. Britain had developed a large stockpile of iron
and textile goods. Because this stockpile was so large, the price of British goods soon plummeted in
comparison to that of American goods. Consequently, many Americans bought British goods rather than
American goods, hurting American manufacturers. James Madison and Henry Clay devised a plan to help
American producers, called the American System. It included a protective tariff more commonly known as
the Tariff of 1816, which increased the price of British goods so that American goods could compete with
them. The northern United States were quite pleased by this tariff. Since the north's economy was based on
manufacturing, many of its industries and workers competed with British imports and benefited from the
tariff. The Southerners, however, were outraged, since they were net consumers of the manufactured goods
which now cost more; further their agricultural exports to Britain might be threatened if Britain retaliated.
The tariff was popular in areas such as Pennsylvania and New York where manufacturing industry
was growing rapidly. It was supported widely in those states to defend American manufacturers against
competition from UK manufacturers. It was also popular in the West in states such as Kentucky, Clay's home
state, where it was hoped to develop hemp and flax as crops and who wanted new tariffs to support these
infant industries. The proposal was less popular with New England merchants who were hoping to restore
trade with the UK and other European powers and import products from Europe in return for US exports
such as cotton. It was also less popular in the South as it would increase the costs of production of their
export crops notably cotton. It was also opposed by people who saw it as raising the costs of living of the
poor. However, the tariff was supported by notable Southern leaders such as President Madison and former
president Thomas Jefferson. Notably, John C. Calhoun who would be a strong opponent of future tariff
regimes supported the Dallas tariff in the Congress.

The Tariff of 1824 (enacted 1824-01-07) was a protective tariff in the United States designed to protect
American industry in the face of cheaper British commodities, especially iron products, wool and cotton
textiles, and agricultural goods. The second protective tariff of the 19th century, the Tariff of 1824 was the
first in which the sectional interests of the North and the South truly came into conflict. The Tariff of 1816
eight years before had passed into law upon a wave of nationalism that followed the War of 1812. But by
1824, this nationalism was transforming into strong sectionalism. Henry Clay advocated his three-point
"American System", a philosophy that was responsible for the Tariff of 1816, the Second Bank of the United
States, and a number of internal improvements. John C. Calhoun embodied the Southern position, having
once favored Clay's tariffs and roads, but by 1824 opposed to both. He saw the protective tariff as a device
that benefited the North at the expense of the South, which relied on foreign manufactured goods and open
foreign markets for its cotton. And a program of turnpikes built at federal expense, which Clay advocated,
would burden the South with taxes without bringing it substantial benefits. Nonetheless, Northern and
Western representatives, whose constituencies produced largely for the domestic market and were thus
mostly immune to the effects of a protective tariff, joined together to pass the tariff through Congress,
beginning the tradition of antagonism between the Southern States and the Northern States that would
ultimately help produce the American Civil War.

The Tariff of 1828, also known as the Tariff of Abominations, enacted on May 19, 1828 was a protective
tariff passed by the U.S. Congress. It was labeled the "Tariff of Abominations" by its Southern detractors
because of the effects it had on the Antebellum Southern economy. It was the highest tariff in U.S. peacetime
history, enacting a 62% tax on 92% of all imported goods.
The goal of the tariff was to protect industry in the northern United States from competing European
goods by increasing the prices of European products. The reaction in the South, particularly in South
Carolina, would lead to the Nullification Crisis that began in late 1832.
Opponents generally felt that the protective features of tariffs were harmful to agrarian interests and
were unconstitutional because they favored one sector of the economy over another. Proponents found no
constitutional restriction on the purposes for which tariffs could be enacted. They argued that strengthening
the industrial capacity of the nation was in the interest of the entire country.
Faced with a reduced market for goods and pressured by British abolitionists, the British reduced
their imports of cotton from the United States, which hurt the South. The tariff forced the South to buy
manufactured goods from U.S. manufacturers, mainly in the North, at a higher price, while Southern states
also faced a reduced income from sales of raw materials.

The Tariff of 1832 was a protectionist tariff in the United States. It was passed as a reduced tariff to remedy
the conflict created by the tariff of 1828, but it was still deemed unsatisfactory by southerners and other
groups hurt by high tariff rates. Southern opposition to this tariff and its predecessor, the Tariff of
Abominations, caused the Nullification Crisis involving South Carolina. The tariff was later lowered down to
35 percent, a reduction of 10 percent, to pacify these objections.

The Tariff of 1833 (also known as the Compromise Tariff of 1833) was proposed by Henry Clay and John
C. Calhoun as a resolution to the Nullification Crisis. It was adopted to gradually reduce the rates after
southerners objected to the protectionism found in the Tariff of 1832 and the 1828 Tariff of Abominations,
which had prompted South Carolina to threaten secession from the Union. This Act stipulated that import
taxes would gradually be cut over the next decade until, by 1842, they matched the levels set in the Tariff of
1816--an average of 20%. The compromise reductions lasted only two months into their final stage before
protectionism was reinstated by the Black Tariff of 1842.

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 bill stipulated sweeping changes to the tariff schedule and collection system, most of which were
designed to augment its protective character. The law replaced most ad valorem rates with specific duties
assessed on a good-by-good basis. It also repealed the credit system of tariff finance and replaced it with a
cash payment system, collected at portside customs houses.
The Black Tariff was signed into law somewhat reluctantly by President John Tyler following a year
of disputes with the Whig leaders in Congress over the restoration of national banking and the government's
land disbursement policies. For the previous year, Whig leaders in Congress had sent bills to Tyler coupling
the tariff hike with a public land disbursement package insisted upon by Henry Clay, prompting a
presidential veto.
In the summer of 1842 representatives from the northeastern manufacturing states began feeling
electoral pressures for a tariff hike before the elections that fall and abandoned Clay's land disbursement
program. The resulting bill contained the tariff hike alone that satisfied the manufacturers and was acceptable
to Tyler since it lacked the land disbursement provisions. The main beneficiary industry to receive protection
under the tariff was iron. Import taxes on iron goods, both raw and manufactured, amounted to almost two
thirds of their price overall and exceeded 100% on many items such as nails and hoop iron. The law also
raised the percentage of dutiable goods from just over 50% of all imports to over 85% of all imports.
The impact of the 1842 tariff was felt almost immediately through a sharp decline in international
trade in 1843. Imports into the United States nearly halved from their 1842 levels and exports, which are
affected by overall trade patterns, dropped by approximately 20%.
The Tariff of 1842 was repealed in 1846 when it was replaced by the Walker Tariff. The Whigs' loss
of Congress and the presidency in 1844 facilitated a Democratic-led effort to reduce the rates again.
Concerns that the Black Tariff's high rates would suppress future trade and customs revenue with it fueled
the movement to repeal the act.

The 1846 Walker tariff was a Democratic bill that reversed the high rates of tariffs imposed by the Whig-
backed "Black Tariff" of 1842 under president John Tyler. It was one of the lowest tariffs in American history
and primarily supported by Southern Democrats who had little industry in their districts.
In 1846 Polk delivered his tariff proposal, designed by Walker, to Congress. Walker urged its
adoption in order to increase commerce between the United States and Britain. He also predicted that a
reduction in overall tariff rates would stimulate overall trade, and with it imports. The result, asserted Walker,
would be a net increase in tax revenue despite a reduction in the rates.
The Democratic-controlled Congress quickly acted on Walker's recommendations. The Walker Tariff
bill produced the nation's first standardized tariff by categorizing goods into distinct schedules at identified
ad valorem rates rather than assigning individual taxes to imports on a case-by-case basis.
The bill resulted in a moderate reduction in many tariff rates and was considered a success in that it
stimulated trade and brought needed revenue into the U.S. Treasury, as well as improved relations with
Britain that had soured over the Oregon boundary dispute. As Walker predicted, the new tariff stimulated
revenue intake from $30 million annually under the Black Tariff in 1845 to almost $45 million annually by
1850. Exports to and imports from Britain rose rapidly in 1847 as both countries lowered their tariff barriers
against each other.
It was passed along with a series of financial reforms proposed by Walker including the Warehousing
Act of 1846. The 1846 tariff rates initiated a fourteen-year period of relative free trade by nineteenth century
standards lasting until the high Morrill Tariff signed by James Buchanan in March 1861.

The Tariff of 1857 was a major tax reduction in the United States, creating a mid-century lowpoint for
tariffs. It amended the Walker Tariff of 1846 by lowering rates to around 17% on average. The bill was
offered in response to a federal budget surplus in the mid 1850s. It was intended to disperse this surplus
through a tax cut.
Supporters of the bill came mostly from Southern and agricultural states, which tended to be export
dependent and tended to support the "free trade" position. They were also joined by a handful of New
England wool manufacturers. This constituency traditionally supported protectionism in the 19th century. A
series of political setbacks for the protectionist movement in the early 1850s, however, prompted them to
forgo protection for their own goods in exchange for reduced tariffs on their raw material imports such as
Canadian wool. According to Kenneth Stampp, the bill “was possible because it did not represent a victory of
one section over the other; nor did it produce a clear division between parties. Its supporters included
Democrats, Republicans, and Americans; representatives of northern merchants, manufacturers, and railroad
interests; and spokesmen for southern farmers and planters. Opposition came largely from two economic
groups: the iron manufacturers of Pennsylvania and the wool growers of New England and the West.”
Producers from other traditional protectionist constituencies such as iron, glass, and sheep farmers
opposed the bill. When the Panic of 1857 struck later that year, protectionists, led by economist Henry C.
Carey, blamed the downturn on the new Tariff schedule. Though economists today reject this explanation,
Carey's arguments rejuvenated the protectionist movement and prompted renewed calls for a tariff increase.

The Morrill Tariff of 1861 was a protective tariff bill passed by the U.S. Congress in early 1861. It was
signed into law by Democratic president, James Buchanan of Pennsylvania, where support for higher tariffs
to protect the iron industry was strong. It replaced the Tariff of 1857. The high rates of the Morrill tariff
inaugurated a period of relatively continuous trade protection in the United States that lasted until the
Underwood Tariff of 1913. The schedule of the Morrill Tariff and its two successor bills were retained long
after the end of the Civil War.
Impact The immediate effect of the Morrill Tariff was to more than double the tax collected on most
dutiable items entering the United States. In 1860 American tariff rates were among the lowest in the world
and also at historical lows by 19th century standards, the average rate for 1857 through 1860 being around
17% overall (ad valorem), or 21% on dutiable items only. The Morrill Tariff immediately raised these
averages to about 26% overall or 36% on dutiable items, and further increases by 1865 left the comparable
rates at 38% and 48%.

The McKinley Tariff of 1890 was what set the average ad valorem tariff rate for imports to the United
States at 48.4%, and protected manufacturing. Its chief proponent was Congressman and future President
William McKinley. In return for its passage, the Sherman Silver Purchase Act was given Republican support.
It raised the prices in the United States under Benjamin Harrison, which may have cost him his presidency in
the next elections.
The tariff was detrimental to the American people, since it acted to raise the price of goods
purchased; anything being bought from overseas which now became more expensive than a local product
rose in price to that of the local product, and anything bought from overseas which even with its price
increase was still cheaper than a local product had to be bought at the new, higher price. This made the mass
of people significantly less wealthy in real terms since everything cost more. This tended to cause an increase
in wages, as people required more pay to maintain proper renumeration for their skills, which in turn
increased the cost of producing local goods, since the cost of labour rose. This in turn acted to make people
poorer.
The tariff was in fact detrimental to the American farmers. Not only did the tariff drive up the prices
of farm equipment (since wages and imported components were more expensive), it also failed to halt sliding
agricultural prices, possibly since there wasn't much competition with imported goods since American
agricultural produce was already cheaper than imports.
The McKinley Tariff Act raised tariffs and brought new trouble to farmers, who were forced to buy
high-priced, protected products from American manufacturers but sell their own products into highly
competitive, unprotected world markets. This upset many rural voters, who voted many Republicans out of
office in the next congressional elections
The Wilson-Gorman Tariff of 1894 (August 27, 1894) slightly reduced the United States tariff rates from
the numbers set in the 1890 McKinley tariff.
Supported by the Democrats, this attempt at tariff reform was important because it imposed an
income tax of two percent to make up for revenue that would be lost by tariff reductions. The bill introduced
by Wilson and passed by the House would have made significant reforms. However, by the time the bill
passed the Senate, it had more than 600 amendments attached that nullified most of the reforms. The "Sugar
Trust" in particular made changes that favored it at the expense of the consumer.
President Grover Cleveland, who had campaigned on tariff reform and supported Wilson's version of
the bill, was devastated that his program had been ruined. He denounced the revised measure as a disgraceful
product of "party perfidy and party dishonor," but still allowed it to become law without his signature,
believing that it was better than nothing and was at the least an improvement over the McKinley tariff.
The income tax provision was struck down in the U.S. Supreme Court case Pollock v. Farmers' Loan
& Trust Co. (1895). Ultimately, the 16th Amendment overruled the holding in the Pollock case, paving the
way for the modern Federal income tax in 1913.
The tariff provisions of Wilson-Gorman were superseded by the Dingley Tariff of 1897.

The Dingley Act of 1897 (July 24, 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.
Under the Act, tariff rates reached a new high, averaging 46.5%, and in some cases up to 57%. The
Republican President William McKinley fully supported the bill.

The Payne-Aldrich Tariff Act of 1909 began in the United States House of Representatives as a bill
lowering certain tariffs on goods entering the United States.[1] It was the first change in tariff laws since the
Dingley Act of 1897.[2] Because the Republican Party had called for reduction of the tariff in 1908,
President William Howard Taft held a special session in Congress in 1909 to discuss the issue. Thus, the
House of Representatives immediately passed a tariff bill sponsored by Sereno E. Payne calling for reduced
tariffs. However, the United States Senate speedily substituted a bill written by Nelson W. Aldrich calling for
fewer reductions and more increases in tariffs.
By the time it ran through the Senate, there had been tacked on so many amendments to the original
bill that it raised many tariff standings. 650 tariff schedules were lowered, 220 raised, and 1,150 left
unchanged.[2] Congress passed the bill officially on April 9, 1909.
Impact of the bill The bill greatly angered Progressives, who were beginning to stop supporting
President William Howard Taft. The debate over the tariff split the Republican Party into Progressives and
Old Guards and led the split party to lose the 1910 congressional election.[4] In the 1912 presidential
elections, because of the split votes amongst Republicans in most states, Democratic candidate Woodrow
Wilson was elected as president in 1912.
The bill enacted an income tax on the privilege of conducting business as a corporation, which was
affirmed in the Supreme Court decision, Flint v. Stone Tracy Co. (also known as the Corporation Tax case).

The Underwood Tariff, or Underwood-Simmons Act (ch. 16, 38 Stat. 116, October 3, 1913), re-imposed the
federal income tax following 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,
It is impossible to offer a meaningful judgment on the impact of the Underwood-Simmons Tariff
because the entire international economic picture was soon upset by the outbreak of World War I. American
products were in great demand throughout the world, making the question of protectionism moot. The next
reordering of national tariff policy would not occur until after the war ended in the Fordney-McCumber
Tariff of 1922.

The Emergency Tariff of 1921 of the United States was enacted on May 27, 1921.
Causes
Due to the Underwood Tariff passed during the Wilson Administration, Republican leaders in the United
States Congress rushed to create a temporary measure to ease the plight of farmers until a better solution
could be put into place.
Effect
The Emergency Tariff increased rates on wheat, sugar, meat, wool and other agricultural products brought
into the United States from foreign nations, which provided protection for domestic producers of those items.
This measure remained in effect until the enactment of the Fordney-McCumber Tariff in 1922.