Many things happened at President Trump’s El Paso rally on Monday night. A BBC cameraman was violently attacked by a #MAGA supporter; you can read his colleague’s account of that here. Trump lied about his crowd size compared to that of Beto O’Rourke’s counter-rally. Both of these things are abhorrent for a sitting president, but unfortunately neither lies nor violence is technically a new thing at a Trump rally.
The hard-working staff here at Spoiler Alerts did notice something new, however: Trump detoured into some 19th-century tariff policy:
So Trump is making a lot of different claims in that clip. Let’s try to sort through them, with the help of Douglas Irwin’s magisterial “Clashing Over Commerce: A History of U.S. Trade Policy,” a winner of a very prestigious 2017 Albie.
First, is Trump correct that in 1888, the United States was “very rich,” with “no debt”? Let’s give him a very generous “partly true.” The United States is much richer now than it was in 1888, and the United States most certainly had debt in the late 19th century. Still, Trump is not completely wrong, in that the U.S. economy was booming in the 1880s, and robust economic growth and high tariffs meant that U.S. government coffers were overflowing. According to Irwin (p. 255): “During the 1880s, the federal government took in $1.40 for every dollar it spent.” That is decidedly not America’s problem today.
Second, is Trump correct when he claims that the Great Tariff Debate of 1888 was about how to spend all the tariff revenue? Not exactly. It would be more accurate to say that Republicans and Democrats alike recognized that there were dangers attached to the United States’ running a persistent budget surplus. Both parties wanted to find ways to slash tariff revenue rather than spend more money, however. They also disagreed on how to do it. As Irwin noted in an NBER paper on the topic, “the Democrats proposed a tariff reduction to reduce customs revenue, the Republicans offered higher tariffs to reduce imports and customs revenue.” Think of it as the 19th-century equivalent of the Laffer curve debate, in that the Republicans were wrong on the numbers.
What Trump is hoping to do, of course, is highlight a time when U.S. tariffs were high and economic growth was robust, proving his contention that protection is good for the economy. Here, however, the parallels start to fall apart. The U.S. economy was actually pretty open in the 1880s beyond trade. The United States was far less restrictive on immigration then than now, and about as receptive to foreign investment and ideas. More importantly, protection was not the cause of rapid economic growth; the boom was due to continental expansion. Trade was much less important to the U.S. economy back then compared with now.
To be fair to Trump, the Great Tariff Debate reveals a few other similarities between the Great Tariff Debate of 1888 and now. Then, as now, the Republicans were the party of high tariffs and the Democrats wanted lower tariffs. The Democrats controlled the House, the Republicans the Senate. Then, as now, the country was split right down the middle by partisan politics. The 1888 election was primarily about tariffs; President Grover Cleveland had devoted the previous year’s State of the Union entirely to the tariff question. It is worth quoting from that missive to Congress. Trump keeps insisting that foreigners are the ones paying the tariffs. Cleveland argued otherwise:
Our present tariff laws, the vicious, inequitable, and illogical source of unnecessary taxation, ought to be at once revised and amended. These laws, as their primary and plain effect, raise the price to consumers of all articles imported and subject to duty by precisely the sum paid for such duties. Thus the amount of the duty measures the tax paid by those who purchase for use these imported articles. Many of these things, however, are raised or manufactured in our own country, and the duties now levied upon foreign goods and products are called protection to these home manufactures, because they render it possible for those of our people who are manufacturers to make these taxed articles and sell them for a price equal to that demanded for the imported goods that have paid customs duty….. Those who buy imports pay the duty charged thereon into the public Treasury, but the great majority of our citizens, who buy domestic articles of the same class, pay a sum at least approximately equal to this duty to the home manufacturer. This reference to the operation of our tariff laws is not made by way of instruction, but in order that we may be constantly reminded of the manner in which they impose a burden upon those who consume domestic products as well as those who consume imported articles, and thus create a tax upon all our people.
In the 1888 presidential election, Cleveland won the popular vote over his Republican opponent, Benjamin Harrison. That did not matter, however, because Harrison won the electoral college. Indeed, the GOP controlled a unified government after the 1888 election, retaining control of the Senate and winning the House back. As a result, in 1890 the United States enacted the McKinley tariff, erecting even higher tariffs.
Trump is a big fan of McKinley. When he tweeted that he was going to be “a Tariff Man,” in December, his trade advisers said it was a homage to McKinley. What Trump failed to mention in El Paso, however, was that the McKinley tariff, the outcome of the Great Tariff Debate of 1888, proved to be a political disaster for the GOP. According to Irwin:
At a time when the public debate was about how to reduce the tariff and the fiscal surplus, [the Mckinley tariff] seemed out of line with public sentiment. In fact, the “Billion Dollar Congress” had miscalculated, and electoral retribution was swift. The Democrats made big gains in the 1890 midterm elections… Even McKinley lost his bid for reelection….
The continued unpopularity of the Billion Dollar Congress hurt Republicans and allowed Democrats to sweep into office in 1892 as the Democrats retained the House, captured the Senate, and Cleveland won the presidency. For the first time since 1858, Democrats seized unified control of government.
Oh, and there is one final fact-check of Trump’s claims: his tariffs have produced next to nothing in the way of trade concessions.