Historian (2:47)

Will forever be remembered as the day American industry was reborn, the day America's destiny was reclaimed, and the day that we began to make America wealthy again. Gonna make it wealthy, good and wealthy.

Martin DeCaro (3:04)

You know, when President Trump says make America great again, he rarely mentions a specific period of time. But when he unveiled his plan to tariff everything on Wednesday, what he billed as Liberation Day, he spoke fondly of the late 19th century.

Historian (3:19)

From 1789 to 1913, we were a tariff backed nation and the United States was proportionately the wealthiest in it has ever been. So wealthy, in fact, that in the 1880s they established a commission to decide what they were going to do with the vast sums of money they were collecting. We were collecting so much money so fast, we didn't know what to do with it. Isn't that a nice problem to have? What do you think, Marco? Good problem? Marco would love that problem. But we don't have that problem anymore. But we're not going to have it very much longer, I will tell you. But they collected so much money, they actually formed a commission to determine what they were going to do with the money, who they were going to give it to and how much. Then in 1913, for reasons unknown to mankind, they established the income tax so that citizens rather than foreign countries would start paying the money necessary to run our government.

Martin DeCaro (4:15)

It is true the federal government was running a budget surplus when Congress in 1890 passed the McKinley Tariff. With its punitive rates on imports from Canada. It was meant to coerce Canada into becoming a US state, another of President Trump's dreams.

Marco (4:31)

What I'd like to see Canada become our 51st state. We give them protection, military protection. We, we don't need them to build our cars. I'd rather see Detroit or South Carolina or any one of our Tennessee, any one of our states build the cars, they could do it very easily. We don't need them for the cars. We don't need them for lumber. We don't need them for anything. We don't need them for energy. We have more energy than they do. We don't need them for energy. So I say, why are we doing this? Why do we, why are we willing to lose between $100 billion and $200 billion a year? We don't need them. As a state, it's different. As a state, it's much different. And there are no tariffs. So I'd love to see that. But some people say that would be a long shot. If people wanted to play the game right, it would be 100% certain that they'd become a state now.

Martin DeCaro (5:27)

Canada was not on the long list of countries Trump brandished during his Liberation Day news conference, countries that'll face higher reciprocal tariff rates. But tariffs already imposed on Canada are expected to stay a blanket 25% on all goods except those under the existing North American Free Trade agreement. However, a 25% tax on Canadian steel and aluminum remains. Writing for Time.com, historian Mark Palin says the McKinley tariff raised average rates to around 50% to pressure Canada into joining the U.S. the tariff explicitly declined to make an exception for Canadian products. Palin says Republicans hope that Canadians who are becoming ever more reliant on the US market would be eager to become the 45th state to avoid the punishing tariffs. Palin goes on to say Secretary of State James G. Blaine saw annexation as a way to eliminate continued contentious competition over fish and timber. Blaine, who co authored the McKinley tariff, publicly stated he hoped for a grander and nobler brotherly love that may unite in the end, the United States and Canada in one perfect union. Blaine declared himself teetotally opposed to giving the Canadians the sentimental satisfaction of waving the British flag and enjoying the actual renumeration of American markets. So this is what I love about history. It is full of surprises. At least they're surprises to me. I'd never heard of this scheme before, and as we know, it did not work. And Canada is not expected to join the United States today either. But the tariffs are real, and they threaten to upend global supply chains, cause higher unemployment and inflation, and what may be the most enduring consequence of all wreck relations between the United States and its allies. But that is a prediction. Let's talk about what we actually know with historian Mark Palin. He teaches British and American imperialism within the Broader History of globalization since 1800 at the University of Exeter in the United Kingdom, and he is the author of Pax Economica, Left Wing Visions of a Free Trade World, that was published last year. And he has a 2016 book, the Conspiracy Conspiracy the Conspiracy of Free the Anglo American Struggle Over Empire and Economic Globalization, 1846-1896. Welcome to the podcast.

Mark Palin (7:50)

Thank you for having me.

Martin DeCaro (7:51)

Well, it's your first time on the show, and you're from Texas. Tell us how you wound up in Exeter teaching Transatlantic and Imperial history.

Mark Palin (8:00)

Well, I was an Air Force brat and so I'm sure maybe that in some way informed my interest in U.S. foreign relations. But it was when I was studying at the University of Texas at Austin, undergrad through graduate school, that I also started encountering some really amazing teachers of the British Empire. My PhD thesis, which became my first book, it was sort of that combination of both of those strands of scholarship in the late 19th century. American foreign policy and its relation to British. And then, yeah, did the usual thing, hopping around a little bit after my PhD some time at the University of Sydney. And I taught at Tufts University for a brief stint and then landed my permanent post here at Exeter a little over 10 years ago now.

Martin DeCaro (8:40)

So you're witnessing bizarre American politics from a distance. We know we're entering a period of higher tariffs. Most likely, the president is known to change his mind. On the one hand, if you're imposing high tariffs to raise revenue and protect US Industries, Right. Which is a dubious proposition in the era of global supply chains, but whatever, right. Then it makes sense to set the tariff at a certain rate and then just leave it alone. But if tariffs are a tool to bend other countries to your will, and we've already seen that the tariffs have been put on, then they've been taken off. When Mexico or Canada makes some gesture to satisfy something the administration wants, well, then you're not going to achieve your economic policy if you're just using them as a negotiating tool. What do you make of all this?

Mark Palin (9:29)

It's a throwback, as we're going to get into. It's a throwback to an earlier era of American foreign economic policy and domestic economic policy, when the United States tariffs for a variety of different mechanisms, both domestic and international, and some of which is quite coercive. And I think it's that coercive element that someone like Trump I think, is drawn to as well. This, this ability to use the tariff as a cudgel to get what he wants from trading partners, what it means for businesses and whatnot that would like to get exceptions. They have to come to him and ask and beg and maybe even throw some money his way, I think, to get those exceptions in these days. So I think that that power dynamic of the tariff, I think it must be a draw for him.

Martin DeCaro (10:08)

Well, he wants auto manufacturers to build their plants here in the United States, but global supply chains, you know, it's, you can make a car here, part of it is made here, meaning in the US but you're getting parts made in Canada or Mexico. So they're crossing the border maybe multiple times, being taxed multiple times. 60% of all vehicles purchased in the United States are imported. So do you see Any spillover consequences potentially here, it could damage broader relations between the two nations and maybe drive Canada to other countries like China.

Mark Palin (10:41)

On top of the clear effects it's going to already having on U.S. and Canadian consumers, let alone not take into account that BMW has its largest manufacturing plants in South Carolina, and more Toyotas, I think, are made now in the United States than Ford cars. The idea of what it means to be an American manufacturer auto company is tough to discern in this global age in which we live. And then, of course, the integration of the North American markets since NAFTA has just exponentially expanded that to the point. Now, your point about the crisscrossing of goods and multiple tariffs being levied every time it crosses over. But yeah, I mean, we could certainly predict, at least from a historical standpoint, it seems likely and understandable even in a contemporary fair, if you were in Canadian shoes or if you're in European shoes and you're seeing this hectic and chaotic and unpredictable tariff policy being wielded by the Trump administration, overturning his own trade policy that he negotiated in his first term, the usmca, making demands that seem rather arbitrary, you're gonna, you're gonna look elsewhere for reliable trading partners. I think that just makes sense. And this is something Canada has done in the past in previous instances of American protectionist policies directed towards them where it found new partners within the British Empire, for example.

Martin DeCaro (11:55)

Now, we're going to get to that in a moment. Matter of fact, my next question is kind of a segue to the history. You know, make America great again is a nebulous idea when you're listening to President Trump use those words, because he's not specifying a period of time. It's more of an attitude or a memory that he's trying to conjure in your head. You can project anything back onto him. You know, maybe there was a certain point in your life as an individual when America was great, or maybe you're thinking of the 1950s, I don't know. But in this case, when it comes to trade, he does seem to idealize the 1890s. That was a different world. I was just picking up a couple of history books from my shelf to read a little bit about this to prepare for you. I did not read the entirety of this 1000 page book. I have in my hands Richard White's the Republic for which It Stands. But I did read the chapters about 1889, 1890. It's a different universe, a different country. And at that time, tariffs were the norm. And I suppose they had some benefits. We'll get into that. What are the benefits of tariffs today? What are the potential positives here? Are there any? Because most economists say no, it remains.

Mark Palin (13:05)

To be seen whether the kind of protectionist element that tariffs can have is going to bear fruit here. If this in some way will revitalize the U.S. steel industry, for example, it's possible. Or perhaps some manufacturers will decide to pick up shop and move back to the United States to avoid the tariff loss. Right. So some of those things that some might see as a gain for the United States is certainly a possibility. But I think the reason why economists are so opposed to these ideas is because the negative consequences are much more impactful.

Martin DeCaro (13:34)

And one goal here is to make Canada a state. Did you ever think you'd hear that one again?

Mark Palin (13:39)

Not in the context of how close we've become with Canada without having to deal with the political union that annexation would entail, let alone the kicking of a hornet's nest, which is Canadian nationalism, which is. I've never seen it arising in the way it's arisen in the last two and a half months or so. I think caught a lot of us, maybe all of us by surprise, infatuation, this obsession even with annexing Canada as part of his foreign policy goals.

Martin DeCaro (14:03)

Americans kind of look at Canada as a. Not really like us, a weird kind of country. Europe in North America, maybe. I don't know. I used to visit Canada many years ago when I lived close to the Washington State, Canadian border, British Columbia. But Canadians are not known, as you say, for nationalism. Right. But they're booing the national anthem, the American national anthem at sporting events and all. I mean, how would. I don't think it's gonna happen. But how would an annexation even take place at this point?

Mark Palin (14:32)

I mean, that's one of the other puzzling things about this, is that even if you could get the Canadians themselves to get behind the annexation, which is a necessity for going through the statehood process, is that you have to have a majority within said territory that is willing to and desirous of becoming a US State. But then it would of Congress, and for many people, Canada is this sort of European liberal. Other would not sit well with Republican politics even before 2016, let alone MAGA politics after 2016. Even if he were to get that part of it, and somehow this would come before Congress to get approved bringing Canada in as a 51st state, I don't think Republicans would even support it because it would be a political disaster for being weird as Far as. Yeah, right, because we're going to play this game.

Martin DeCaro (15:18)

Canada would be one of the largest states population 40 million people in Canada. So there'd be a lot of Canadian members of the House of Representatives. Would they want to have their healthcare brought with them here? I mean it's just the possibilities are kind of crazy as we're discussing here. So 1890, the McKinley tariff was designed to make Canada a state. It's called the McKinley Tariff. He was in Congress at the time. The president was Benjamin Harrison, a Republican who won the election of 1888. So his first year in office was 1889 and that was also the 51st Congress of the United States. I'll get to the Republicans legislative agenda here in a minute. But what was the status of Canada in 1890? It had become a British dominion in 1867. So not a colony anymore, but also not fully independent. What was going on there?

Mark Palin (16:10)

I've gotten into this with some Canadians on social media after I published this time Feast because I do refer to it as still a colony in 1890. So in 1867 they federate the confederation of most of the Canadian territories into one. And so it's often seen understandably as sort of the origins of the Canadian nation. But I think the important thing here for 1890s context is that its foreign policy was still under the control of the British imperial government. The terminology of dominionhood wouldn't really become a formal thing until the 1920s from that standpoint and because of its reliance on the British appeal government for its defense issues, for foreign policy issues, thinking of Canada still as a Colony in 1890 as. Even though it has increasing amounts of autonomy over certain domestic policies, that kind of ambiguous place that the tariff will fit within that.

Martin DeCaro (16:57)

Yeah. So where does trade policy fall? Is that a foreign policy issue? It's both really. Right. So who was in control of Canadian trade relations? Was it London or the Canadians?

Mark Palin (17:07)

So this is a really fascinating story I think within the British imperial history is how some of the so called white settler colonies, Canada, Australia, New Zealand, South Africa, they are gradually given more autonomy over their own domestic policies. And one of the first things that they are given more control over is their own tariff policies. And so as you point out though this. I think maybe one of the reasons why it becomes such a popular tool for Canadian governments as well as for US governments in this context is that the Canadian were able to use the tariff to have some control over its foreign policy, even though technically it would have been under British imperial control at that point. And so tariff has both a domestic and a foreign policy tool.

Martin DeCaro (17:47)

Your most recent book came out last year. Pax Economica. Left Wing Visions of a Free Trade World is about the emergence of free trade ideology and free trade policy. Late 19th century free traders were fighting protectionists. In the United States, protectionism was still dominant. Why were tariffs so important to the US Federal budget? Why was it so important to the Republicans legislative agenda? It seemed to be more than just an economic policy.

Mark Palin (18:18)

The Republican Party, when it comes into being in the 1850s, it is, as we all probably have been taught it in the United States, the party of anti slavery. But within that is also hiding behind the scenes, so to speak, in the 1850s is also the fact that it's the party of protectionism, of the American system of protection, as it was known. Once slavery comes to an end in 1865, the Republicans are going to have a great deal of power. They're going to dominate the White House for most of the decades to come. And with slavery out of the picture, they're going to rebrand themselves as the party of protectionism. And for them, it's connected to high tariffs to protect America's maybe more nascent industries compared to, say, the more industrially advanced British. It's a way to get American workers behind them by saying that there's a close association with high tariffs and high wages, which there was something to that, even though it also meant higher prices for goods. The British and the British Empire were probably the biggest antagonists of the United States in the late 19th century. Still after the Civil War and Anglo American relations were extremely tense still, of course, we've got two wars before that, the American Revolution, the War of 1812, still fresh in people's minds, using the tariff as a way to attack the British who had turned to free trade in the 1840s. This is essentially a useful counter to twist the lion's tail, referring to the British lion in that context. And so for all those sorts of reasons, that was useful. But on top of that, we have to think and remember that this was a very different time when it comes to taxation collection in the United States. For revenue. The United States was not very different from any other country at this time for driving most of its revenue from indirect taxation, mainly through tariffs. So tariffs could be used and were used to derive revenues to make governments run, including the United States. It's just not all of them would necessarily use the tariff also as a way to protect domestic industries from international competition. That's where the Republicans come in. So The Democrats are for what we call a tariff for revenue only, or free trade as it would have been thought of back then. Were not used to disincentivize or protect domestic industries from competition. And the Republicans come at it the other way, the party of protectionism in that sense. So tariffs as both a revenue raising function, but also as a way to protect and nurse infant industries as they were thought of.

Martin DeCaro (20:32)

The United States was not the economic leader of the world in 1890, or maybe it was coming close to that. But economic nationalism and protectionism is what you do when you're trying to catch up to the hegemon. And as you mentioned, Great Britain had turned to free trade and it had the largest navy in the world. It was still the imperial leader, if you will, at this point. Is that right?

Mark Palin (20:50)

Yeah. So Britain would have been the by far most industrially advanced country across the mid to late 19th century, although Germany and the United States were certainly starting to catch up by around 1890. As many would point out at the time at least. Maybe this was because of the protectionist policies that the United States was implementing.

Martin DeCaro (21:05)

Politics was so much more interesting in those days. The different factions, geographical factions in each party there was a faction called the Mugwumps. In the Republican Party at this point, we don't even to dug. Maybe I'll do a different episode about the Mugwumps at some point. And just one other thing before we dive further into the Congress of 188990 and the McKinley tariff, you mentioned it before about the relations between the U.S. and Canada had been not great. One of the first things George Washington did after becoming commander in chief in the Revolutionary War was order an invasion of Canada. There was some fighting during the War of 1812 as well. But by 1890, what are relations like? Are they testy? They're not openly hostile?

Mark Palin (21:47)

Oh yeah. Oh, absolutely.

Martin DeCaro (21:49)

Oh, they are.

Mark Palin (21:49)

Oh, it's extremely fraught. One of the many reasons behind pushes for annexation, depending on which part of the political spectrum you're coming from, is to get rid of the constant threat of war with America's northern neighbor.

Martin DeCaro (22:02)

Oh, wow.

Mark Palin (22:03)

Which often would arise after surrounding fisheries disputes. That was the main one. So there's a really important one and I think 1887 in the Bering Sea, when these fishing disputes would break out, often it would involve navies and standoffs and people would get hurt. And so people who would like to use this for political advantage in Congress, mainly Republicans, but not only Republicans. Anglophobia, fear and hatred of the British is still really strong. Canada is still Part of the British Empire. They would use these moments to argue for a new invasion of Canada and for others, annexing Canada to avoid these conflicts in the future.

Martin DeCaro (22:38)

The United States had a tiny army, But I guess one thing you can do with tariff revenues is build up your army and your navy. Because as you mentioned before, the tariff provided 60% of federal revenue in 1889. Most of the rest came from taxes on tobacco and booze for total revenue of $387 million. First of all, think of that for a second. We spend about meaning the US spends that much per second. Now we have annual budget deficits of a trillion. A trillion is a thousand billion, A billion is a thousand million. So all federal revenue in one year, $387 million. And 87 million of that was a surplus. Reading from Richard White's book, the Republic for which it Stands, ultimately, he says, Republican control of the 51st Congress and the priority they put on the tariff proved that sometimes in American politics, nothing fails like success. Republicans had courted the American public by convincing them the Democrats would institute free trade by lowering the tariff. Uh oh, can't do that. Then Republicans convinced themselves that their victory meant Americans wanted dramatically higher tariffs. And they shaped their legislative agenda around that in fashioning Congress into a comparatively well honed and efficient piece of legislative machinery. The Republicans had no idea they were creating a political suicide machine. In pushing for a strengthened tariff, writes Richard White, Republicans embraced a newer vision of the United States as an industrial nation, which an active federal government would protect and nurture. The tariff remained the sun around which all others revolved.

Mark Palin (24:20)

Of course, I find this late 19th century tariff history extremely fascinating. It used to be a harder sell for my students, but they're coming around as well. Well, the Democrats actually did have a president come in before this for the first time in a while. Grover Cleveland's election in 1884. That's when the mugwumps jumped from the Republican ship to support Grover Cleveland. These are the Republican abolitionist free traders I was talking about. And they become part of Cleveland's inner circle to a certain extent. And they help turn Cleveland more and more to becoming an open advocate of trade liberalization. So Cleveland launches in 1888. He makes the 1880, 1888 presidential elections almost entirely about the future of US trade policy. The great debate of 1888, trade policy, Cleveland and his. Yeah, the great debate. The Harrison campaign runs as the protectionist option in 1888. Interestingly, despite I think, how it was accurately described, as far as seeing it as a mandate The Harrison camp wins, but they don't win the popular vote. So.

Martin DeCaro (25:19)

That's right.

Mark Palin (25:20)

You have the mandate there. I guess maybe it's more in the fact that so many Republicans are elected to Congress for a brief period there. The Republicans really control all parts of the federal government in unusual ways for that timeframe. So maybe that's where that mandate view comes from. And so, yeah, it's going to be the Benjamin Harrison administration, openly Anglophobic, anti British, strongly protectionist administration that's going to take over the reins of power in 1889. And one of the first things they're going to do is try to push through a really radical protectionist tariff policy, the so called McKinley Tariff of 1890, and use up a lot of its capital in doing so.

Martin DeCaro (25:58)

Take us through it here. How high did they raise the tariff, the McKinley tariff, which was principally sponsored by William McKinley, a rising Republican congressman from Ohio. And how did Canada react to that.

Mark Palin (26:10)

Tariff up until that point, Perhaps the most extreme tariff in US history? They raised rates to an average of around 50%, which is extremely high. And that's certainly a part of the radicalism of the McKinley tariff. There's also this insertion of reciprocity, Republican style reciprocity within the McKinley tariff too, that maybe we can dig into a bit more if you want. So you have William McKinley, this Ohio congressman who establishes himself by the 1880s as the lead spokesperson for the Republican party on issues of the tariff, gets the nickname the Napoleon of Protection as a result of this. So he's the one in Congress who's going to be pushing through the tariff, but he's going to be working closely with the Secretary of State for the Harrison administration, James G. Blaine, the plumed Knight of Maine. And Blaine is, I think, perhaps the most expansionist, small p progressive thinker within the Republican party at that time. And he has long had his sights on Latin America and getting the British from its last vestiges of influence and power in the Western hemisphere, whether it's in these informal control in Latin America or more formally in the case of, say, Canada or the British West Indies.

Martin DeCaro (27:21)

That's a good point, because at this point the United States does not have an overseas empire.

Mark Palin (27:26)

That's exactly right. Yeah.

Martin DeCaro (27:27)

We were a continental empire. The US Was a continental empire, not an overseas empire. Go ahead.

Mark Palin (27:32)

Absolutely. Yeah. This is Blaine's brainchild, is to insert this reciprocity provision. It's important to not confuse this with unconditional most favored nation reciprocity, which is how it was implemented with the general agreement on tariffs and trade in 1947. It's how we understand reciprocity in the World Trade Organization, which is that it actually creates trade liberalization to spread by, say, two countries sign a reciprocal agreement that lowers tariffs on a variety of goods. Any other country that wants to join in on that particular deal, they just have to lower their tariffs too. And then they get the same reciprocal agreements and so continues to kind of expand trade liberalization laws. That's not how the Republicans used reciprocity back then. So this is a really kind of revolutionary tool that Blaine comes up with. It's not unconditional or multilateral. It's bilateral, and it's very, very precise and very coercive in the way it's implemented there. So this reciprocity provision can only be signed between the United States and another signatory, and the deal only applies to them. And there's always this sort of Damocles hanging over the signatory's heads. If they ever step out of line, the United States could retaliate massive protective tariffs of its own to keep them in line. And so Blaine has this vision for using this reciprocity provision to expand America's informal power across Latin America. And of course, for him and others within the Republican party, Canada becoming part of the United States is a big part of that too. And that's part of rationale for the McKinnon terror.

Martin DeCaro (28:52)

Hey, you write here@time.com and I'll share a link to your essay at Time in my weekly newsletter. You write here. Privately, Blaine admitted to President Harrison that by denying reciprocity, Canada would ultimately, I believe, seek admission to the Union. And at one point, both sides believed Canada would eventually have to become a US State because the US Was going to keep this onerous tariff on Canadian imports. Over in London, there's something called the Cobden Club. What was the Cobden Club and what do they have to do with this story?

Mark Palin (29:25)

The Cobden Club was a British organization, non governmental organization, that was founded in 1866. It was right after the death of what was then a very influential politician in British politics named Richard Cobden. He was the leader of the free trade movement in Britain in the 1830s and 1840s and would help oversee the overturning of the protectionist corn laws, ushering in this almost century of British adherence to free trade as an ideology and as a policy. He's also one of the biggest critics of British coercive enforcement of free trade in places like China and India. He's also A leader of the international peace movement because he connects free trade with this idea of peaceful integration. You don't go to war with your trading partners. This kind of idea of capitalist peace theory, as we talk about now in social sciences, he's in many ways enunciates this in the biggest way. And so this is why when they create the Cobden Club, they start opening their ranks to international members who agree, who have a similar idea. And so there's quite a few American members of the Cobden Club, these mugwumps, these leaders of the American free trade movement, who are closely associated with the British Cobden Club. And it's going to feed into these conspiracy theories that Republicans will exacerbate trying to say that if you're a free trader, then you're working for the British to undermine American markets and this kind of thing.

Martin DeCaro (30:38)

Yeah. The Cobden Club called the tariff an outrage on civilization. You cite British Liberal Lion Playfair. Quite a name. Lion Playfair warned the new law looked like a covert attack on Canada. If the Tariff Act's objective really be, as Canadian Prime Minister Sir John MacDonald thinks, to force the United States lion and the Canadian lamb to lie down together, this can only be accomplished by the lamb being inside the lion, he warned. I mentioned before that both sides thought that Canada would have to become a US State because of this. But it had the opposite effect. You write here what happened.

Mark Palin (31:15)

There were plenty of people at this time in the 1880s and early 1890s where the liberal Party was the party of free trade, the Conservative Party was the party of protection. This is a very common political framing for these debates across the transatlantic region. If you were conservative politically, you tended to be protectionist. If you were liberal progressive, you tended to be pro free trade. And this is the case in Canada this time, too. And so you have these Canadian pacifists, Canadian free traders. Many within the Liberal Party believe that unfettered trade through, say, reciprocity with the United States would be a suitable answer for ameliorating tensions with its neighbor to the south. The Conservatives, led by John McDonald at this time, are going to take the opposite approach. So McDonald will oversee the creation of the national policy of protectionism in Canada at 1879 and increasingly sees the United States and the protectionist Republicans as an enemy eyeing Canada as the next acquisition in the expansion of the United States continentally. And he's going to use this to great political advantage surrounding the McKinley Tariff of 1890 to go after the Liberal Party members who are advocating for closer commercial union with the United States at this time. And ultimately it's going to be very effective in playing up this idea of conservative nationalism. Canadian sovereignty is at stake, but also closer ties with the British Empire. This is how we can get around this. We can have high tariff laws against the United States and closer ties with trade, ties with the rest of the.

Martin DeCaro (32:42)

Empire, similar to what happened just recently. Right. The ruling party in Canada used the tariff and the animosity with Trump as a rallying cry in the elections.

Mark Palin (32:51)

Yeah, things have been flipped a bit as far as the politics and the trade are involved there. But even there, you can see it with the kind of the lasting ramifications of the McKinley tariff on Canadian politics. It's really fascinating. So the Liberal Party runs for reciprocity and free trade in the United States and gets rather handily defeated in the 1891 federal elections by the protectionist, loyalist, pro empire crowd of the Conservatives. But interestingly, when the Liberals do finally come into power in Canada in 1896, they're going to double down on this British imperial trade preference. It's going to be Canada, it's going to under a Liberal government, Wilford Laurier's government, that's going to oversee the first passage of imperial trade preference between Canada and the rest of the empire.

Martin DeCaro (33:33)

And the tariff backfired on the Republican Party in the United States.

Mark Palin (33:38)

The passage of the McKinley tariff aligned closely with another onset of an economic depression in the United States that would last up through around 1897. Especially people on the opposite end of the aisle. They were able to, to use connect the dots for people and say that the McKinley tariff exacerbated that depression. To a certain extent, this is used effectively when Grover Cleveland is able to get reelected and then oversee a bit of reform of the tariff system thereafter.

Martin DeCaro (34:03)

There was a lot going on there. It wasn't only about the tariff. The Republican Party, which did have a majority in Congress, had a number of different constituencies from different parts of the country. So Western Republicans had different views on the tariff than, say, Eastern Republicans.

Mark Palin (34:18)

And there's also really interesting factionalists and infighting happening within both parties around this other big domestic and foreign economic policy issues. The silver question, whether or not the United States would just be tied to gold or if it'd be tied to both gold and silver. And this is, I think, where the Western Republicans also come into play. I mean, by and large, at this point, they might not all agree on the extremities, the high level of the tariff. That's passed by the Harrison administration. But for the most part, the Republican Party has come around to the idea of being the party of protectionism. But there are certainly some Republicans out West who are much more concerned about making sure that the United States is buying and using silver. This is the kind of Colorado Republicans. And so they're able to use if they stick together as a minority in Congress, they can get some concessions from their own party if they hold out on voting for the tariff. There's all sorts of interesting political infighting happening that does, you're right, transcend the tariff policy issue.

Martin DeCaro (35:13)

Yeah. Republicans claimed, and many believed the tariff would raise workers wages in the industrial Northeast and Midwest. But they had to go beyond this to appease farmers and Western soft money men who had sent anti monopolists to the Senate. Just to cite Richard White one last time there. So Republicans get drubbed in the midterm elections. It actually, to date, was the worst drubbing in a midterm election. Largest number of seats flipped in US History up to that time. And as you write here@time.com within two years of the McKinley tariffs passage, Canadian agricultural exports to Britain jumped from 3.5 million to 15 million, and produce and animal exports grew from 16 million to 24 million. And beginning in 1897, as you said, Canadians began granting preferential market access to British imports. And US Manufacturers continue to move production to Canada to bypass its tariff wall. So this was a disaster for everybody involved, really. I'm not really great at predicting the future, but it appears to me that we're gonna see another disaster here, that this is not gonna benefit anyone, the Trump tariff policies, at least not in the short term, this rather bizarre obsession.

Mark Palin (36:27)

With surplus versus deficits that seem to drive it, which made a lot more sense in the context, as we covered here, of when revenues were so reliant on tariffs.

Martin DeCaro (36:37)

But as you were saying, Trump's understanding of trade, he sees trade deficits, he says that means other countries are robbing us or they're taking away from us.

Mark Palin (36:47)

Maybe this is an indictment perhaps of the Wharton School of business. Actually, Joseph Wharton, the steel magnate, was a hardcore protectionist and really active in late 19th century Republican politics. And he founds the Wharton School at the University of Pennsylvania, where Trump got his degree from, he founds the Wharton School in 18, I think, 1881 to become a protectionist academic bastion for the United States. And so there's a really fascinating sort of Wharton School connection here that might help explain maybe this bizarre understanding of surpluses versus deficits. And how the tariff plays into that or where it even plays into issues of immigration. I mean, I think it is actually probably worth pointing out here, too, that this is also something that's going to happen under McKinley, not necessarily McKinley tariff, when McKinley is president. And after the Spanish American War, after the United States acquires its colonial empire. As you touched on earlier, one of the first things that comes up in the Supreme Court is what to do with Puerto Rico. In particular, comes up with a guy in New York who's an importer who's trying to import oranges from Puerto Rico after Puerto Rico became a US Colony and he was forced to pay tariffs on Puerto Rican oranges. And he takes this all the way up to the Supreme Court. It becomes the first of the insular cases, the Downs v. Bidwell case of 1901, in which a Republican controlled Supreme Court sides with the McKinley administration and sides with the idea that the Constitution doesn't follow the flag in this context around the tariff. In no small part, it was to do so so that they could continue to curtail immigration from the new colonies. So if we could crack down on and maintain this protective tariff and make sure that the Constitution doesn't follow the flag there, that that means we can also keep Filipino immigrants from coming into the United States. We can keep Puerto Ricans.

Martin DeCaro (38:23)

Well, what's really silly about today's debate is that the Trump administration, people in the administration who know better, continue to talk about using tariffs to enrich our country. And also this notion that we're taxing China, we're taxing Canada.

Economic Analyst (38:39)

Tariffs are a tax hike on foreign countries that, again, have been ripping us off. Tariffs are a tax cut for the American people. And the president is a staunch advocate of tax cuts. As you know, he campaigned on no taxes on tips, no taxes on overtime, no taxes on Social Security benefits. He is committed to all three of those things and he expects Congress to pass them later this year.

Mark Palin (39:01)

I'm sorry, have you ever paid a tariff? Because I have. They don't get charged on foreign companies, they get charged on the importers.

Economic Analyst (39:08)

And ultimately, when we have fair and balanced trade, which the American people have not seen in decades, as I said at the beginning, revenues will stay here, wages will go up, and our country will be made wealthy again. And I think it's insulting that you are trying to test my knowledge of economics and the decisions that this president has made. I now regret giving a question to the Associated Press.

Martin DeCaro (39:31)

The U.S. federal government does not have the authority to tax a foreign country. Importers pay the taxes. So they're not even being honest or accurate about who's gonna pay for all of this.

Mark Palin (39:41)

Clearly, Trump, at least part of him, knows this. There was that recent. So many different things in the news every day. But I think it was the day before that I came across that there's some sort of conversations that have come to light between him and some CEOs of US manufacturers. So he's aware of it and he's trying to make these car companies pay rather than the American consumer as a way to kind of get around this.

Martin DeCaro (40:00)

And he said in an interview with Kristen Welker at NBC News, he could care less if car prices go up.

Advertiser (40:07)

Speaking to NBC's Meet the Press moderator Kristen Welker, Trump said, quote, I couldn't care less.

Mark Palin (40:12)

I hope they raise their prices, because if they do, people are going to.

Advertiser (40:15)

Buy American made cars.

Mark Palin (40:17)

We have plenty.

Martin DeCaro (40:19)

Tariffs are a bad idea. But I think we do have to acknowledge that free trade, free trade ideology, post Cold War, free trade ideology became politically toxic and did have negative consequences for American communities, American industries. It also had ramifications for immigration from Mexico to the United States when nafta, for instance, opened up Mexican markets to US Agribusiness. So there were negative economic consequences, even though we all benefited from cheap imports. Right. And it also did become politically toxic. So the pendulum now, unfortunately, has swung too far the other way. The party in power is embracing potentially economically disastrous policies.

Mark Palin (41:04)

I've made the case in the conclusion of the most recent book, Pax Economica. I've tried to kind of dig into this a bit and you know, the connection between the Republican Party, the Reagan revolution of the 1980s, when the Republicans finally become supportive of free trade policies. I argue that it's more than coincidental that that's when you start seeing this kind of rightward drift of free trade policies, giving more seats at the table for multinational corporations when deciding on free trade agreements rather than labor and environmental protections and things like this and all these things that people were protesting in, say, Seattle and 99 and beyond, the outsourcing that invariably comes from free trade agreements is an issue. Although, as you pointed out, if we go back to the McKinley tariff era, there was still outsourcing happening back then, too. It was just to get around protective tariff laws, much like we saw with, remember, one of the first things that happened when Trump started introducing tariffs in his first administration, Harley Davidson picked up and left to go elsewhere to get.

Martin DeCaro (41:58)

Around these things were there global supply chains in 1890. I don't think so. Not like today.

Mark Palin (42:04)

Not like today. They certainly existed. There were certainly the beginnings of them. I think we could call them globalized economic system. But yeah, obviously now it's exponentially more integrated. Yeah.

Ronald Reagan (42:16)

Well, fortunately we and our trading partners are going to deal with economic matters together because that's the only way to move ahead, I'm glad to say we're moving away from protectionism and toward greater economic growth and job creation. One of the historic events of our time is the U. S. Canada free trade agreement that I entered into this year with prime minister Brian Mulroney. This agreement between the world's two greatest trading partners will eliminate tariff barriers between the United States and Canada by the year 1999 and established the largest free trade area on earth. The advantages of both our countries will be enormous in terms of jobs and prosperity. But as much as this path breaking agreement does for the people of the United States and Canada, this agreement looked at in the sweep of history is truly a gift to the world. It creates a model that can be imitated and expanded and ultimately made unified, universal among free nations.

Martin DeCaro (43:14)

A radio address by Ronald Reagan in 1988. Ancient history on the next episode of history as it happens. Appomattox@160. When did the civil war end? And I don't mean that only metaphorically. That's next with historian Michael Vorenberg. As we report history as it happens happens. New episodes every Tuesday and Friday. My newsletter every Friday. Sign up@historyasithappens.com.