The
McKinley Tariff, which became law on October 1, 1890, was a
protective tariff (tax) that raised the average duty on foreign
imports to almost 50%. The act was backed by the Republicans who
strongly supported high tariffs on imported goods.
1890
McKinley Tariff for kids: What is a Tariff?
Definition
and Summary: Tariffs are taxes placed on goods
imported from foreign countries. Tariffs enable a nation
to raise money from these taxes and at the same time
protect a nation's home-grown goods from cheaper priced foreign
items.
What was
the purpose of the
McKinley Tariff?
The purpose of the McKinley Tariff
was to protect domestic industries from foreign competition. Its
purpose was therefore to discourage the importation of goods from
other countries. By putting this "handicap" on imported goods,
imported products would become more expensive as compared to those
made in America, thereby protecting American manufacturing and
industries. The McKinley Tariff was also designed to restrict the
importation of wheat and other consumables from Europe and Canada
and to place raw sugar on the free (not taxed) list.
1890
McKinley Tariff for kids: What did the McKinley Tariff do?
The McKinley Tariff
increased rates for many manufactured goods, while it placed items
such as sugar and coffee on the free list. The tariff raised the
average duty on imports from 38% to almost 50%. Duties were
imposed on wool and hides which had been duty-free since 1872. It protected
the nation's industries by driving up the price of an imported item
that competed with domestic products. The effect of this is that it
enabled domestic producers either to charge higher prices for their
goods, or to capitalize on their own smaller taxes by charging lower
prices and attracting more customers.
McKinley Tariff for kids: The Effect of the McKinley Tariff on Hawaii
The McKinley Tariff had
a dramatic effect on Hawaii. Hawaii had long attracted the
interest of American businessmen in the lucrative sugar trade. The
United States federal government had provided generous terms to the
sugar growers of Hawaii in the treaties of 1849 and 1875 and
American businessmen had acquired substantial fortunes in the
islands. The McKinley Tariff proved to a turning point in the
relations between the United States and Hawaii. In 1890 the United
States Congress approved the McKinley Tariff, which raised import
rates on foreign sugar. This had an alarming effect on the sugar
planters in Hawaii who, as a direct result of the McKinley Tariff,
were being undersold in the American market. The McKinley Act
removed the duty on all raw sugar coming into the United States,
which deprived Hawaiian sugar producers of their privileged status.
The powerful American sugar growers in Hawaii led by Lorrin A.
Thurston, the leader of the 'Hawaiian League', were agitating for
the Annexation of Hawaii. They realized that if Hawaii were to be
annexed by the United States of America, the tariff problem relating
to the sugar would automatically disappear as Hawaii would no longer
be a foreign country. For additional facts refer to
Queen Liliuokalani and
the Annexation of Hawaii.
McKinley Tariff for kids: The Effect of the McKinley Tariff on the
Farmers
The McKinley Tariff
was particularly harmful to southern and western farmers who sold
their crops on unprotected markets, but were forced to buy expensive
manufactured goods. The backlash from the farmers gave rise to the
formation of the Populist Party.
McKinley Tariff for kids: The Napoleon of Protection
William McKinley
was an ardent Protectionist who believed in imposing tariffs to
guard growing industries within the United States from foreign
competition. Whilst many industrialists and businessmen, especially
the Robber Barons,
supported this legislation American consumers generally opposed it,
as prices increased for goods. Feelings of the American public ran
high as the McKinley Tariff quickly followed the
Sherman Antitrust Act which
ostensibly clamped down on monopolies, but turned out to be pretty
ineffective.
McKinley Tariff for kids: The Republicans
Many Americans had been led to believe that the
Sherman Act addressed the damaging effect of the monopolies on
prices and therefore consumers. When the McKinley Tariff was passed,
only 3 months later, prices rose and people felt duped by the
Republican politicians. This is one of the contributing factors that
led to the defeat of Benjamin Harrison in the next presidential
election and the victory and re-election of Grover Cleveland and the
Democrat Party. Consequently the McKinley Tariff was replaced with
the Wilson-Gorman Tariff in 1894, which promptly lowered tariff
rates. The rates went up again when William McKinley became
president and the 1897 Dingley
Tariff was passed to counteract the effects of the Wilson-Gorman
Tariff.
Protective Tariffs
For additional facts and a timeline
refer to Protectionism and Tariffs.
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