History of Tariffs . What is a tariff?. A tariff is a tax levied by a government on imported goods. In some countries it also may be a tax on exported goods. A tariff also is called a customs duty or an impost . . What is the purpose of tariffs?.
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In general terms the purposes of a tariff are twofold:
To supply revenue to the government. This was especially true in the early days of the United States when other forms of federal taxation had not been developed
To protect domestic producers from foreign competition. Placing a tax on an imported foreign item would make a similar domestic item more competitive in price. Use of this form of tariff is called protectionism. The stock argument presented by protectionists is that such duties are needed only until there is an equalization of production costs between the U.S. and the foreign nation.
Tariff of 1872 – reduced tariffs on some manufactured goods (Grant Administration)
Tariff of 1875 – further reduced tariffs by 10% (Grant Administration)
Tariff of 1883 “Mongrel Tariff” – Republicans abandoned reform; duties were lowered on some items but increased on most manufactured goods; opposed by western and southern farmers; supported by northern industrialist; (Arthur Administration)
Tariff of 1890 “McKinley Tariff” – highest tariff up to that point in US History – 48%. Western and Southern politicians did not oppose in exchange for support of the Sherman Silver Purchase Act – government would buy Silver at market prices and issue notes that could be redeemed for gold or silver;