William McKinley and the Tariff Debate: Lessons from History
McKinley’s Legacy and Trump’s Tariff Revival
William McKinley, the 25th President of the United States, has reemerged from relative obscurity in modern political discourse, thanks in large part to former President Donald Trump. Trump frequently praised McKinley during his campaign and presidency, hailing him as a “great president” who made America rich through tariffs. McKinley, known as the “tariff king,” had a reputation for championing protective trade policies. In 1890, six years before his presidency, Congress passed his landmark legislation that raised tariffs on imported manufactured goods to approximately 50%. This move solidified McKinley’s stance as a staunch advocate for protectionist economics. Trump, echoing McKinley’s rhetoric, has often referred to himself as a “tariff man” and has implemented similar policies, renaming North America’s highest peak, Denali, back to Mount McKinley in honor of his political idol.
However, historians and economists argue that Trump’s admiration for McKinley oversimplifies the complexities of the late 19th century economy. Douglas Irwin, a Dartmouth economics professor and leading expert on McKinley’s policies, points out that tariffs were not the sole driver of wealth creation during McKinley’s era. Instead, the period was marked by rapid technological advancements, industrialization, and immigration, which played far more significant roles in shaping the nation’s prosperity.
The Role of Technology and Immigration in Economic Growth
The late 19th century was a time of unprecedented economic transformation in the United States. Technological breakthroughs, such as the widespread adoption of electricity, telecommunications, and railroads, laid the foundation for industrial growth. These innovations created new industries, jobs, and opportunities, driving the nation’s expansion. Immigration also played a critical role during this period, as millions of newcomers arrived in the U.S., providing a steady supply of labor that fueled industrial growth. While these factors contributed to America’s rising wealth, tariffs were just one piece of the puzzle.
Irwin explains that tariffs were not the magic bullet Trump often claims they were. While they did generate significant revenue for the federal government—accounting for more than half of all government income during McKinley’s time—they were not the primary driver of economic prosperity. Instead, the combination of technological progress, an expanding workforce, and increased capital investment created a thriving economy. This stands in stark contrast to Trump’s narrative, which often minimizes the role of these other factors in favor of a singular focus on tariffs.
The Historical Context of Tariffs and Taxation
Tariffs were a much more significant source of government revenue in the 19th century than they are today. At the time, they accounted for over 50% of federal income, though this was still a decrease from pre-Civil War levels when tariffs funded nearly the entire federal budget. The rest of the government’s revenue came primarily from excise taxes on items like alcohol. It wasn’t until nearly 12 years after McKinley’s death that the 16th Amendment to the Constitution, allowing for a federal income tax, was ratified.
Despite their importance to the federal budget, tariffs were not without controversy. Unlike Trump’s claims that foreign companies pay tariffs, it was widely understood in McKinley’s era that the costs were ultimately borne by American consumers. Republicans of the time argued that the higher prices caused by tariffs were a worthy trade-off for protecting domestic industries and ensuring higher wages for American workers. This rationale, however, has been largely absent from modern debates over tariffs, with Trump and others often mischaracterizing how they work.
TheShift in McKinley’s Economic Philosophy
One of the most overlooked aspects of McKinley’s legacy is his late-career shift away from protectionism toward a more free-trade oriented approach. In September 1901, just one day before he was assassinated, McKinley delivered a speech in which he called for reciprocity agreements and the opening of foreign markets to U.S. goods. Recognizing the growing excess capacity in American manufacturing, McKinley advocated for using this capacity to expand U.S. exports globally. This shift marked a significant departure from his earlier “tariff man” persona and hinted at a more nuanced understanding of the global economy.
However, McKinley’s assassination left his new vision for trade policy unrealized. His successor, Theodore Roosevelt, largely maintained the existing tariff structures, and it wasn’t until the mid-20th century that tariffs began to decline in importance as a source of federal revenue. By the end of World War II, tariffs accounted for less than 2% of government income, a far cry from their dominance in McKinley’s time.
The Differences Between Then and Now
The economic landscape of McKinley’s era bears little resemblance to the modern U.S. economy. At the turn of the 20th century, federal spending was relatively small, accounting for less than 3% of the nation’s gross domestic product (GDP). Today, federal spending exceeds 23% of GDP, with the bulk allocated to servicing the national debt, funding the military, and supporting entitlement programs like Social Security, Medicare, and Medicaid. This dramatic expansion of government responsibilities means that tariffs can no longer play the same role they did in McKinley’s time.
Moreover, the global economy has become far more interconnected, with international trade agreements and multinational corporations shaping economic policies in ways unimaginable during McKinley’s presidency. While tariffs remain a tool in the policymaker’s arsenal, they are no longer the central mechanism for funding government operations or driving economic growth. This shift underscores the limitations of relying solely on tariff policies to address contemporary economic challenges.
Lessons for Today’s Tariff Debates
The debates over tariffs in the 19th century offer valuable lessons for modern policymakers. McKinley’s story highlights the complexity of economic policy and the dangers of oversimplifying historical precedents. While tariffs played a role in shaping the U.S. economy during McKinley’s time, they were part of a broader constellation of factors that drove growth and prosperity.
Today, as policymakers grapple with issues like trade imbalances, globalization, and economic inequality, they would do well to adopt a similarly holistic approach. McKinley’s later shift toward free trade also serves as a reminder that economic policies must evolve to meet changing circumstances. Rather than fixating on tariffs as a panacea, modern leaders should consider how technology, immigration, and international cooperation can be leveraged to build a more prosperous and equitable economy. By learning from history, we can avoid repeating its mistakes and forge a path forward that balances competing interests and fosters long-term growth.
