Tariff of 1789

Overview

• First major piece of legislation in the U.S. after the Constitution's ratification.
• Purposes:
  • Support government
  • Protect developing manufacturing industries
  • Raise revenue for federal debt
• Sponsored by: Congressman James Madison
• Signed by: President George Washington on July 6, 1789.

Tariff Details

• Imposed duties on imported goods:
  • 50 per ton on goods by foreign ships
  • 30 per ton on American ships owned by foreigners
  • 6 per ton on American-owned vessels

Economic Context Post-Revolution

• Weak Congress under the Articles of Confederation:
  • Unable to impose tariffs or establish reciprocal trade agreements
  • Flood of cheap European goods harming U.S. manufacturers
• Major Debts: Leftover from the Revolutionary War
• Congressional Powers: New Constitution allowed tariff imposition

Debates and Sectional Interests

• Northern Manufacturers: Favored high duties for protection
• Southern Planters: Desired lower tariffs for cheap imports
• Madison's Navigation: Passed tariff without discriminatory British provision

Economic Conditions Before Passage

• Post-Revolution Reorganization: Led to uncertainty and hardship
• British Navigation Acts: Restricted U.S. trade
• Failed Trade Treaties: Attempts at reciprocal trade mostly unsuccessful
• State Retaliations: Varied duties led to chaotic commercial war

Commerce and Constitution

• Adoption of Constitution alleviated many economic struggles
• New Powers: Finance and trade regulation, tax levying
• Increased Petitions: From manufacturers for relief

Import Duty Legislation

• Compromise Tariff Rates: Between protective and revenue-generating
• Duties on Selected Goods: Up to 50% on steel, ships, tobacco, more

Tonnage Duty Legislation

• Navigation System: Favorable rates for American ships
• Coastal Trade Reserved: For U.S. vessels
• Foreign Relations: Britain remained key trading partner

Political and Sectional Responses

• Hamilton vs. Madison: First significant breach over economic strategy
• North-South Tensions: High tariffs favored Northern industries but burdened Southern agriculture
• Emergence of First Party System: Economic differences fueled political division

Outcomes

• Customs System: Collection Act of 1789 established U.S. Customs Service
• Revenue Generation: Tariffs formed the majority of federal revenue until the 20th century