Going back to outdated policies without considering the modern economic landscape can be risky. The purpose of this article is to provide a strong, clear argument to help our fellow Americans see why history’s lessons matter today.
By : Ya Libnan Editorial Board
In the wake of Donald Trump’s recent election, economic policy discussions are centered on his fervent endorsement of protectionist policies, especially tariffs. Trump’s fascination with William McKinley’s approach to tariffs has sparked debate over whether America should return to an era of high tariffs as the backbone of economic growth. However, historical and economic experts warn that McKinley’s era, often seen as the zenith of tariff-driven policy, was also marred by recessions, rising prices, and monopoly power, ultimately showcasing the limits and dangers of protectionism.
The McKinley Connection
Trump has often invoked McKinley as a model, emphasizing his legacy as a “tariff president.” In the 1890s, McKinley promoted the McKinley Tariff of 1890, which imposed high duties on imported goods. Trump’s admiration for McKinley is partly based on the economic conditions of that era, which he sees as an age of American wealth fueled by tariff revenue. Yet Trump’s narrative omits a critical part of McKinley’s economic journey: his eventual recognition that free trade and international partnerships would be vital for the nation’s prosperity in a new global economy.
In his final speech in Buffalo, New York, in 1901, McKinley advocated for freer trade and reciprocal agreements with other nations. He recognized that America’s long-term success hinged on cooperation, not isolation. This vision was tragically interrupted by McKinley’s assassination, but his final speech laid the foundation for the century-long American preference for lower tariffs and open markets—a course that has propelled the U.S. into its current economic leadership.
Trump’s Tariff Plan: A Look at the Numbers
Trump’s tariff plan aims to emulate McKinley’s economic model, proposing tariffs as a primary revenue source to reduce taxes and fund federal programs. But analysts argue that replicating McKinley’s policies in today’s complex global economy is unrealistic and potentially damaging. While tariffs in the 1890s comprised about half of U.S. federal revenue, experts estimate that today’s economic landscape would require tariffs upwards of 70% to replace income tax revenue—an astronomical figure that would likely cripple global trade and destabilize markets.
Estimates from the Peterson Institute for International Economics show that a 10% tariff on all imports, plus a 60% tariff on Chinese goods, would generate roughly $225 billion annually. However, this falls significantly short of the estimated $5.2 trillion to $6.9 trillion needed to cover Trump’s proposed spending over the next decade. Additionally, such tariffs would invite retaliation from other countries, potentially initiating a cycle of trade wars that could harm American jobs and businesses.
Historical Warnings: McKinley to Hoover
History provides cautionary tales regarding high tariffs. Following McKinley, the Smoot-Hawley Tariff Act of 1930, signed by Herbert Hoover, intensified the Great Depression by severely restricting global trade. Many economists argue that this tariff was a major contributor to prolonged economic downturns, skyrocketing unemployment, and market contractions.
Today, the U.S. economy is flourishing, with record-low unemployment, a strong GDP, and companies valued at nearly double the nation’s total output. Turning back to the isolationist policies of the past risks undermining these gains. Restrictive tariffs could disrupt the intricate supply chains that have fueled the success of American businesses and led to the lowest unemployment rates in modern history.
The Global Economy in 2024: Why Tariffs May No Longer Fit
Unlike McKinley’s era, today’s economy is globally interconnected. Many economists argue that the “America First” model may hurt American consumers by raising prices and limiting access to affordable goods. Furthermore, high tariffs could spark inflationary pressures, reducing the purchasing power of American families.
Since McKinley’s day, the world has changed dramatically. The rise of multinational corporations, complex supply chains, and the rapid exchange of technology and services across borders makes high tariffs a less feasible approach. Instead, collaborative trade agreements and low tariffs are now widely recognized as essential to sustaining economic stability and growth in a competitive global market.
The Path Forward: Learning from History
While Trump admires McKinley’s legacy, his proposed tariffs may overlook the lessons that even McKinley began to understand toward the end of his presidency. Economists and historians alike emphasize that protectionist policies are not inherently harmful but are often most effective when used sparingly, in coordination with global trading partners. The drive for national self-sufficiency is understandable, but high tariffs could stymie innovation and harm American workers.
As the U.S. stands on the brink of implementing historic tariffs, it’s worth revisiting McKinley’s parting words. He realized that success in a globalized world required cooperation, not just protectionism. America’s current economic prosperity may depend on its ability to balance national interests with a commitment to free and fair trade, fostering both resilience at home and collaboration abroad.
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