The Tariff Act of 1890, commonly called the McKinley Tariff, was an act of the United States Congress, framed by then Representative

William McKinley William McKinley (January 29, 1843September 14, 1901) was the 25th president of the United States, serving from 1897 until his assassination in 1901. As a politician he led a realignment that made his Republican Party largely dominant in ...

, that became law on October 1, 1890. The

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and pol ...

raised the average duty on imports to almost fifty percent, an increase designed to protect domestic industries and workers from foreign competition, as promised in the Republican platform. It represented

protectionism Protectionism, sometimes referred to as trade 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 regulatio ...

, a tactic supported by Republicans and denounced by Democrats. It was a major topics for fierce debate in the 1890 Congressional elections, which gave a Democratic landslide. Democrats replaced the McKinley Tariff with the Wilson–Gorman Tariff Act in 1894, which lowered tariff rates.

Description

After 450 amendments, the Tariff Act of 1890 was passed and increased average duties across all imports from 38% to 49.5%.Reitano 1994, p. 129 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.Taussig 1892, p. 273 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.

Eliminated tariffs

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 threat of reimposing tariffs as a means to get other countries to lower their tariffs on U.S. exports. Although this 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 authorizing the executive to act merely as an "agent" of Congress, rather than as a lawmaker itself.FindLaw.com ''Field v. Clark'' decision text
/ref> 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.

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 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.

Wool

The new tariff provisions for

wool Wool is the textile fibre obtained from sheep and other mammals, especially goats, rabbits, and camelids. The term may also refer to inorganic materials, such as mineral wool and glass wool, that have properties similar to animal 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. 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.

Reactions

The tariff was not well received by Americans who suffered a steep increase in prices. 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 The following elections occurred in the year 1892. {{TOC right Asia Japan * 1892 Japanese general election Europe Denmark * 1892 Danish Folketing election Portugal * 1892 Portuguese legislative election United Kingdom * 1892 Chelmsford by-elect ...

, 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 1890 tariff was also poorly received abroad. Protectionists in the British Empire used it to argue for tariff retaliation and imperial trade preference. The McKinley Tariff had the effect of raising the bilateral American tariff toward Britain from 35% in 1890 to 43% in 1891, whereas the average American tariff actually fell on account of the McKinley Tariff placing a number of tropical commodities on the free list.

Background

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 and workers from foreign competition, known as

. In December 1887, President

Grover Cleveland Stephen Grover Cleveland (March 18, 1837June 24, 1908) was an American lawyer and politician who served as the 22nd and 24th president of the United States from 1885 to 1889 and from 1893 to 1897. Cleveland is the only president in American ...

, a Democrat, devoted his entire

State of the Union Address The State of the Union Address (sometimes abbreviated to SOTU) is an annual message delivered by the president of the United States to a joint session of the United States Congress near the beginning of each calendar year on the current conditi ...

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 Benjamin Harrison (August 20, 1833March 13, 1901) was an American lawyer and politician who served as the 23rd president of the United States from 1889 to 1893. He was a member of the Harrison family of Virginia–a grandson of the ninth pr ...

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.

, of

Ohio Ohio () is a state in the Midwestern region of the United States. Of the fifty U.S. states, it is the 34th-largest by area, and with a population of nearly 11.8 million, is the seventh-most populous and tenth-most densely populated. The sta ...

, was defeated by

Thomas Brackett Reed Thomas Brackett Reed (October 18, 1839 – December 7, 1902) was an American politician from the state of Maine. A member of the Republican Party, he was elected to the United States House of Representatives 12 times, first in 1876, and served ...

to be Speaker of the House after the 1888 elections. McKinley instead became chairman of the

House Ways and Means Committee The Committee on Ways and Means is the chief tax-writing committee of the United States House of Representatives. The committee has jurisdiction over all taxation, tariffs, and other revenue-raising measures, as well as a number of other progra ...

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.Irwin 1998, p. 59 After the

American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states ...

, 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.

Effects

Douglas Irwin Douglas A. Irwin is the John Sloan Dickey Third Century Professor in the Social Sciences in the Economics Department at Dartmouth College and the author of seven books. He is an expert on both past and present U.S. trade policy, especially policy d ...

'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.