The Appeal of the Industrial Era for Trump
President Trump has expressed admiration for the period of industrial and financial growth that spanned from the American Civil War to around 1900, often referred to as the “Golden Age.” This era is recognized for its superficial prosperity, frequently highlighted by Mark Twain.
In particular, Trump seems to favor President William McKinley, who championed high tariff protectionism during his presidency. McKinley, a long-serving member of Congress, won the presidency in 1896 largely due to voter support.
Trump has praised McKinley, noting that in his first speech as president he claimed McKinley had significantly enriched the nation through customs duties. Additionally, Trump has restored the historic name of North America’s highest peak, which was altered from Mount McKinley back to Mount Denali during the Obama administration in 2015.
Both McKinley and Trump shared the belief that tariffs could serve as a crucial source of income for the U.S., both becoming heavily invested in protective tariffs in their thirties. For McKinley, this interest began when he was around 34 and received encouragement from then-President Rutherford Hayes.
This approach was a secure choice, as the Republican Party and its earlier incarnations, like the Whigs and Federalists, typically supported high tariffs to nurture American industry.
The McKinley Tariff of 1890 stands out as one of the most significant tariff acts, competing with a lower tariff initiative proposed by Democrats. The Wilson-Gorman Tariff, which passed in 1894, decreased tariffs by about 2% but added a small income tax on high earners. This historical context might play a role in Trump’s focus on increasing tariffs, especially as he often pairs that with tax cuts for wealthy Americans.
In a television interview from 1988, Trump, then 42, expressed strong frustration over how Americans were being “taken advantage of” in global trade, a sentiment he has maintained for roughly a decade. He has framed the U.S. as being “raped” in economic terms, despite the country being, arguably, the most prominent economic power since at least 1900.
“We were the richest from 1870 to 1913,” Trump declared after starting his second term, referencing a time when tariffs constituted a primary source of revenue before the introduction of federal income tax in 1913.
He reminisces about the benefits seen during McKinley’s tariff era, though those economic conditions followed a major recession during the subsequent Democratic presidency of Grover Cleveland.
A significant flaw in Trump’s arguments is that the late 19th century lacked programs like Social Security or Medicare, and the military forces were quite limited. So, the notion that tariff revenue could effectively replace current income tax revenue isn’t particularly realistic.
In fact, tariffs now account for less than 1% of the U.S. GDP, which stands at a staggering $29 trillion, contributing marginally to federal income.
Moreover, it’s worth noting that McKinley himself softened his stance on tariffs during his time in office, acknowledging that the thriving U.S. economy, buoyed by low-cost labor and British investments, necessitated greater exports than could be absorbed domestically. McKinley even spoke on the idea of “reciprocity,” indicating a more openness to free trade.
Today, historians largely agree that the economic boom of the late 1890s cannot solely be attributed to tariff policies. Following the introduction of the Simmons Customs Act in 1913, which drastically lowered tariffs, the federal income tax began to take precedence.
Yet, Trump persists with a rigid tariff policy, despite noticeable market declines and disruptions to the global economy. He claims on social media that reducing tariffs could lead to significant income tax reductions for many Americans.
The most recent trade deficit reached approximately $1.2 trillion, balanced by around $300 billion in profits from trade services, leaving a net deficit around $900 billion. Notably, about half of this deficit stems from trade with China and Mexico.
While efforts to address issues with these countries make sense, Trump has taken a more global approach.
His ongoing tariff conflict, which echoes McKinley’s era nearly a century later, hinges on a perceived crisis that grants him leverage under the National Emergency Act of 1977. This rationale, based on foreign threats, allows for unilateral adjustments to trade policies.
The fallout includes plunging stock markets, supply chain interruptions, and declines in the dollar’s value, causing significant increases in the prices of foreign goods. There are concerns that inflation could sway congressional control back to the Democrats next year.
Considering Trump’s ambitious and sometimes erratic foreign policy beliefs, one might argue that striving for a “Golden Age” model is not particularly relevant today.
