Consequences Of U.S. Tariffs Could Well Echo the McKinley Era Tariffs

Introduction

More than a century ago, then-Representative William McKinley pursued an aggressive tariff strategy that sought to protect American industry and reduce reliance on foreign imports…The logic was simple: If foreign goods were more expensive, Americans would buy domestic products, fueling economic expansion but the results were not so simple.

What follows is a slightly edited and abridged article from usfunds.com which is entitled “Investor Alert: President McKinley’s Tariff Mishap Could Be a Warning Sign for Trump’s Trade War”.

The Results

Instead of strengthening America’s trade position, the tariff triggered retaliation from other nations. Prices rose, particularly for middle- and lower-income Americans, and political backlash followed. In the 1890 midterm elections, voters revolted: McKinley lost his seat, and Democrats took control of the House.

At the time, some Republicans dreamed of annexing Canada, believing that the economic pressure would push Canadians to seek statehood. Instead, the tariff had the opposite effect—Canadian nationalists rallied against what they saw as economic coercion. The country deepened its ties with the British Empire, reinforcing the very trade barriers the U.S. sought to disrupt.

The Reality Today

Trump has made tariffs a cornerstone of his economic strategy, arguing they will bring jobs back to America and reduce the trade deficit but, just like in McKinley’s time, history suggests tariffs don’t actually reduce trade deficits—they often increase them. Why? Because tariffs discourage trade on both sides, leading to fewer exports and fewer imports.

The data backs this up. According to the Peterson Institute for International Economics (PIIE), countries with higher tariffs tend to have larger trade deficits, not smaller ones and, while tariffs may benefit specific industries in the short term, they also raise costs for American consumers and businesses, leading to lower consumer spending and weaker confidence in the economy.

That’s exactly what we’re seeing today.