In 1890, the United States implemented the McKinley Tariff, a protectionist measure that significantly raised import duties, particularly on manufactured goods and agricultural products. Named after then-Congressman William McKinley, the law aimed to shield American industries from foreign competition, particularly from European and Canadian producers. The result? Increased prices for consumers, retaliatory tariffs from trade partners, and strained relations with Canada.
More than a century later, echoes of the McKinley Tariff can be heard in modern U.S.-Canada trade tensions, where tariffs continue to be a flashpoint in economic and political discourse. From steel and aluminum to softwood lumber and dairy, protectionist measures remain a key element of cross-border trade disputes.
The McKinley Tariff: A Historical Perspective
The McKinley Tariff of 1890 raised the average duty on imports to nearly 50%, one of the highest levels in U.S. history. It was designed to protect American businesses from foreign competition by making imported goods more expensive. However, this came at a cost:
- Higher Prices for American Consumers – With fewer competitive imports, domestic prices soared, hurting the purchasing power of ordinary citizens.
- Canadian Retaliation – In response, Canada implemented countertariffs, targeting U.S. exports to Canada, particularly agricultural goods. This move strained relations between the two neighbors.
- Political Backlash – The tariff was deeply unpopular with American farmers, who relied on exports. The dissatisfaction contributed to McKinley’s Republican Party losing seats in the 1892 election, leading to the tariff’s eventual repeal and replacement by the Wilson-Gorman Tariff Act in 1894.
Despite its eventual rollback, the McKinley Tariff set a precedent for protectionist policies that have resurfaced throughout U.S. history, particularly in trade relations with Canada.
How Protectionism Lives On: Canada-U.S. Tariffs Today
Although the McKinley Tariff is long gone, modern trade tensions between Canada and the U.S. remain a recurring issue. Several key industries have been at the center of recent disputes:
1. Steel and Aluminum Tariffs
In 2018, the Trump administration imposed Section 232 tariffs on steel (25%) and aluminum (10%) imports, citing national security concerns. Canada, one of the largest suppliers of these metals to the U.S., retaliated with countertariffs on American products, including food and household goods. Although these tariffs were lifted in 2019, the episode underscored the volatility of U.S.-Canada trade relations.
2. Softwood Lumber Disputes
The U.S. has repeatedly imposed duties on Canadian softwood lumber, arguing that Canada’s subsidies to its lumber industry create unfair competition. This dispute, ongoing for decades, has resulted in cycles of tariffs, countertariffs, and legal challenges through international trade bodies. Like the McKinley Tariff, these duties make housing more expensive for American consumers and builders.
3. Dairy and Agricultural Trade Restrictions
Agriculture was a major point of contention in the U.S.-Mexico-Canada Agreement (USMCA), which replaced NAFTA in 2020. The U.S. sought greater access to Canada’s supply-managed dairy industry, arguing that Canadian price controls created an unfair advantage. While some concessions were made, dairy remains a politically sensitive issue, much like it was during the McKinley era.
Lessons from History: What the McKinley Tariff Teaches Us
1. Tariffs Often Backfire
Just as the McKinley Tariff led to higher consumer prices and international retaliation, modern tariffs have caused supply chain disruptions, trade wars, and increased costs for businesses and consumers alike.
2. Protectionism Strains U.S.-Canada Relations
Trade restrictions between the U.S. and Canada have consistently led to diplomatic and economic tensions. Whether in 1890 or today, protectionist policies tend to provoke retaliatory measures that harm both sides.
3. Free Trade Agreements Offer Stability
The eventual repeal of the McKinley Tariff set the stage for more open trade policies. Similarly, agreements like NAFTA and USMCA have sought to reduce barriers, though periodic disputes show that tensions persist.
The McKinley Tariff serves as a historical reminder of the risks of protectionism. While governments may impose tariffs to protect domestic industries, the unintended consequences—higher prices, retaliatory actions, and economic inefficiencies—often outweigh the benefits. As Canada and the U.S. continue to navigate trade disputes, policymakers would do well to learn from the past: cooperation, not confrontation, tends to yield the best long-term outcomes for both nations.
