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Those attending former president Donald Trump’s campaign rallies can be forgiven for not knowing a lot about the super-high 1890 tariff championed by then Ohio Congressman William McKinley. Few today outside of a few historians know much about McKinley, but those following the current presidential campaign have been hearing a lot from Trump about what a fine thing a high tariff is. In fact, high tariffs are the centerpiece of the Trump economic plan for the second term he hopes to have (when he isn’t talking about getting rid of immigrants). As a Peterson Institute analysis shows, both policies would be terrible for the American economy.
Trump clearly admires President McKinley both for the tariff bearing his name and for the honor of having the tallest mountain in North America, Mt. McKinley, named after him (even though, as Trump noted, the mountain was later renamed Denali by President Barack Obama).
What lessons should be taken from the passage of the Tariff Act of 1890, which increased average duties across all imports from 38 to 49.5 percent? Well, for one thing, with domestic prices driven up by the tariff, the measure was very unpopular. It led to a political disaster for the Republicans, who lost the House in the 1890 election in dramatic fashion, cutting the number of seats they held from 171 to 88. Republicans running in today’s election for the House might take note.
There is more to the McKinley story. On becoming president, he signed the Dingley Tariff, named after Nelson Dingley, a Congressman from Maine. The 1897 act increased tariffs on some important consumer products, such as woolens, linens, silks, china, and sugar, nudging the tariff rates on those products temporarily up to as high as 52 percent. The purpose of this act was to reverse the Democrats’ slight tariff reduction in 1894 when they gained power in the aftermath of the Republican debacle.
As president, however, McKinley was more forward-looking than he had been as a representative from Ohio. He embraced trade reciprocity and thought it was time to move away from protective tariffs through trade agreements. In that effort, he opposed protectionist Republicans in the Senate. As he said in his second inaugural address, “Reciprocal trade arrangements with other nations should in liberal spirit be carefully cultivated and promoted.” He later stated, “Commercial wars are unprofitable. A policy of good will and friendly trade relations will prevent reprisals.” Hardly a Trumpian perspective. Unfortunately, he was assassinated before he could make any progress on this approach.
McKinley was also very careful about not demonizing immigrants. While he opposed letting into the country anarchists—the "debased and criminal classes of the Old World"—he valued the immigrants who “seek to become citizen[s].” He campaigned on the economic value immigrants brought to a growing America.
One could argue that, from a trade policy perspective, President Richard Nixon is a better historical model for Trump; Nixon favored a tough negotiating stance to reduce foreign trade barriers. He also worked on perfecting the imperial presidency. He proposed to the Congress that the president be authorized to change any law provided that the change was necessary or appropriate to implement a trade agreement removing a nontariff trade barrier. Under Nixon’s proposal, the president’s decision to change US laws would take effect unless one House of Congress disapproved—a sweeping transfer of power from the legislative to the executive branch. While the House was willing to go along, the Senate balked. Instead, Congress gave the president a special streamlined trade agreement approval process, banning the filibuster, requiring an up or down vote in a limited period of time, with no amendments allowed. The nickname for this legislative process was “fast-track.”
Nixon’s Trade Act of 1974, signed into law by his successor, President Gerald R. Ford, became the template for trade policy modern US presidents used until Trump took office. The law preauthorized removal of trade barriers on a reciprocal basis in negotiations with foreign countries and was renewed several times. Republican presidents went on to win many elections by championing freer trade. President Ronald Reagan campaigned on free trade in North America in 1980. His successor, President George H. W. Bush, agreed with his Canadian and Mexican counterparts to negotiate what became the North American Free Trade Agreement (NAFTA). More recently, the singular legislative triumph of the Trump administration was getting Congress to approve the US-Mexico-Canada Free Trade Agreement (USMCA), the successor agreement to NAFTA, with strong bipartisan support. It preserves largely borderless trade in North America, utilizing trade promotion authority and focusing on fair and open trade.
The secret of USMCA’s success, as well as the Nixon-Ford Trade Act of 1974, is that it strikes balance between trade liberalization and the interests of firms and workers who might suffer harm from trade. It underwrites a continuation of US and global economic growth, a policy supported by presidents of both political parties until the Trump administration. The President’s Trade Agreements Program, begun by Franklin Roosevelt during the Great Depression, brought about a more peaceful, more prosperous world, unparalleled in human history. It is based on eliminating trade restrictions that divide the world and prevent economic integration.
For nearly eight decades, a more open trade policy cemented trade relations with our allies and friends in a rules-based system that the United States was instrumental in creating. A balance was struck between trade liberalization and making sure that trade was neither unfair nor injurious. Imposing high tariffs on all products from all sources would isolate America from its markets abroad. American workers and American consumers would be the first to feel the pain.
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Special Project
“In the 1890s, our country was probably the wealthiest it ever was because it was a system of tariffs. We had a president, you know McKinley? Remember Mount McKinley?” —Donald Trump