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.
For additional facts and a timeline refer to Protectionism and Tariffs.