Americans have used protective and revenue tariffs. Protective tariffs help new American industries compete with established foreign industries. Proponents of protective tariffs claim that all segments of America benefit from tariffs. Foes of protective tariffs argue that protective tariffs help a few interests at the expense of many. By barring foreign goods from American markets, American manufacturers can charge whatever price they want for their goods and force American consumers to pay exorbitant prices. Conversely, revenue tariffs are used to provide the government with revenue and offer only incidental protection to industries.
During the Civil War, no session of Congress occurred where Congress did not alter the tariff schedules. Few items remained duty free by the end of the war. The tariffs helped keep the federal government solvent and allowed it to pay for a costly war.
Congress increased the levels of protection after the war. The issue continued to polarize political parties. Republicans sponsored a high protective tariff and Democrats advocated free trade principles. These Democrats believed that there should be no barriers to trade. North Carolina Populists criticized the “money power” of corporations, trusts, railroads, banks, and protective tariffs. In 1887, President Grover Cleveland addressed their concerns when he devoted his entire message to Congress to reforming the tariff. The presidential election of 1888 became a referendum on the tariff and the Republican candidate, Benjamin Harrison, won more electoral votes than Cleveland but lost the popular vote to the incumbent. Cleveland won North Carolina by over thirteen thousand votes.
In 1890, Republicans passed the McKinley tariff of 1890 on a strict party line vote. At the time, this tariff became the highest in the nation’s history. American voters took their wrath out on Republicans who lost the presidency and both houses of Congress in 1892 over the tariff. Democrats then tried to lower duties but the Wilson-Gorman tariff of 1894 made few reductions to the McKinley tariff.
The Dingley Tariff of 1897 restored levels close to those of the McKinley tariff. At the start of the twentieth century, Republicans second-guessed the usefulness of high tariffs. Reformers in the GOP argued that high tariffs aided trusts. In one of his first actions as president, William H. Taft called a special session of Congress to lower the tariff. This action pleased farmers and reformers in the Old North State. Congress responded with the Payne-Aldrich Tariff of 1909. This bill lowered duties on about thirty-percent of enumerated goods but raised duties on about ten-percent of goods. About sixty percent of the goods, then, were unaffected.
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