The Tariff Act of 1789 was the first major piece of legislation passed in the United States after the ratification of the United States Constitution. It had two purposes: to protect manufacturing industries developing in the nation and to raise revenue for the federal government. It was sponsored by Congressman James Madison, passed by the 1st United States Congress, and signed into law by President George Washington. The act levied a 50¢ per ton duty on goods imported by foreign ships; American-owned vessels were charged 6¢ per ton.[citation needed][dubious ]
In the aftermath of the American Revolution, the weak Congress of the Confederation had been unable to impose a tariff or reach reciprocal trade agreements with most European powers, creating a situation in which the country was unable to prevent a flood of European goods which were damaging domestic manufacturers even while Britain and other countries placed high duties on U.S. goods. The country also faced major debts left over from the Revolutionary War, and needed new sources of funding to maintain financial solvency. One of the major powers granted under the new Constitution was the ability to levy tariffs, and after the 1st Congress was seated, passage of a tariff bill became one of the most pressing issues.
The debates over the purpose of the tariff exposed the sectional interests at stake: Northern manufacturers favored high duties to protect industry; Southern planters desired a low tariff that would foster cheap consumer imports. Ultimately, Madison navigated the tariff to passage, but he was unable to include a provision in the final bill that would have discriminated against British imports. After passing both houses of Congress, President Washington signed the act in law on July 6, 1789 when they used it to pay off the US war debt.