Wall Street Strategies
  remember me
Sign Up | Lost Password
Tariffs & Republican Party

By Charles Payne, CEO and Principal Analyst

This week, the word ‘tariff’ was tossed around a lot much to the chagrin of some business leaders and many Republicans. However, it wasn’t always considered to be against Republican orthodoxy; on the contrary, the use of tariffs was once the center plank of the party’s economic policies. Abraham Lincoln was known to favor tariffs to protect the economy and to generate revenue.

But it was the landslide victory of William McKinley; after winning the election in 1897, he gained popularity as a champion for the use of tariffs and signed the Dingley Tariff.

  • Imposed tariffs on wool and hides
  • Increased existing tariffs on linens, silks, china and (doubled tariff) sugar

America began an impressive rebound that began with the Panic of 1983, as business investments surged ultimately, resulting in McKinley’s victory by an even larger margin in the election. On a side note, McKinley was considered the first president to manage the media. 

The Business of America is Business

Then, there were Warren Harding and Calvin Coolidge, who campaigned on trade protectionism as a way to pull the country out of a Depression.  The Fordney - McCumber Tariff Act of 1922 allowed the President latitude to hike tariffs as high as 50%. For those that railed about inexpensive imports, President Coolidge would reply: “Cheap goods means cheap men.”

The roaring twenties ushered in a booming economy and it was the best decade for the stock market.

Smoot - Hawley

So, what changed the Republican Party from proud protectionists to free market disciples?   In reaction to the economic turmoil that accompanied the stock market crash of 1929, President Herbert Hoover signed the Smoot-Hawley Tariff into law.  The second highest tariff in U.S. history, itcovered 20,000 import items and soon triggered counter-tariffs from key trading partners. 

Many economists think this act turned the aftermath from a stock market crash into the Great Depression.

FDR beat Hoover. Republicans moved away from the idea of tariffs as an economic weapon or revenue generator, but there was a time when it was a slam dunk.  It is true the world is more intertwined than ever before, including ‘product sharing’ between Mexican and United States manufacturing.

It’s going to be interesting to see how this all plays out, but I suspect there will not be any additional tariffs.

Charles Payne
Wall Street Strategies


Add a Comment!

Submitted comments are subject to moderation before posting.
Charles Payne is featured on the Fox Business Network Monday-Friday at 6 PM ET on "Making Money with Charles Payne".

Charles Payne

FREE commentary in your Inbox! Click here
No credit card is needed.

The WStreet Market Commentary delivers the daily unbiased insight and guidance of Charles Payne and the Wall Street Strategies Research Desk.

The daily commentary takes a common sense look at the big picture, gives you advice on sector rotation and trends and helps you determine how news may affect your portfolio. We forecast what the future drivers of the market will be by interpreting the fundamental, technical, and behavioral aspects of the market.

From time to time, the commentary includes free stock picks and trading strategies to help you make money and maintain financial and mental balance in the stock market. The commentary is delivered twice a day, in the morning and afternoon, keeping you informed at pivotal times and frequently includes analysis of the major indices and actionable analysis of individual issues.

Take control of your future starting today. Simply click here to create your account.

Home | Products & Services | Education | In The Media | Help | About Us |
Disclaimer | Updated Privacy Policy | Terms of Use |
All Rights Reserved.