Trump says America was at its richest in the late 1800s. Here are the facts.
Story by Victor Reklaitis, Marketwatch, 2/8/25
As President Donald Trump promises that more tariffs will be coming, he has pointed to history to explain his fervor for imposing taxes on imports.
“We were at our richest from 1870 to 1913. That’s when we were a tariff country, and then they went to an income-tax concept. And, you know, how did that work out? It’s fine, it’s OK, but it would have been very much better,” Trump told reporters in the Oval Office on Jan. 31, as he seemed to suggest tariffs were superior to income taxes.
That’s far from the only praise that Trump and his allies have heaped on tariffs, the Gilded Age and the periods just before or after it. In his inaugural address on Jan. 20, Trump said William McKinley — who was president from 1897 to 1901, and before that an influential congressman — “made our country very rich through tariffs.”
Similarly, Trump’s nominee for commerce secretary, Howard Lutnick, said at a Trump campaign rally in October that America was great about 125 years ago when the country “had no income tax, and all we had was tariffs.” In addition, Trump last summer floated the idea of imposing an “all-tariff policy” that could let the U.S. eliminate income taxes.
The history lessons from Trump and his allies come as they look to bolster support for broad use of tariffs while facing skepticism from economists and some on Wall Street.
Historians have a different view of the economy in the late-19th and early-20th century. They say the U.S. was ascendant from 1870 to 1913, but not at its richest. And the country’s improving standing wasn’t primarily due to tariffs — which are typically paid by companies doing the importing, and often passed on to American consumers.
Around the time of the Gilded Age, the U.S. was “certainly a rising power, and through a long-term process, it was becoming more and more prosperous and bigger, better and more productive,” said Chris Meissner, an expert on economic history who teaches at the University of California, Davis. However, that’s not what Trump said, the professor added. “He said that we were at our richest. That’s not true,” Meissner told MarketWatch in an interview.
To assess richness, Meissner recommended looking at how U.S. gross domestic product per capita has changed over time — and noted that it’s much higher today. He said that while GDP per capita “sounds fancy,” it basically shows the average household’s income.
Troy Senik, the author of a biography of Grover Cleveland, who was U.S. president in the 1880s and 1890s, echoed Meissner’s view. It’s “just flatly incorrect” to say we were at our richest from 1870 to 1913, Senik said in an email. He pointed to the chart shown above, which indicates that U.S. GDP per capita — when adjusted for inflation — is around six times higher today than it was back then.
Senik said it’s possible that because there’s such a strong consensus among economists that tariffs are “economically destructive,” Trump has looked for “other outside sources of validation.”
“He seems to believe he’s found that in the Gilded Age, and William McKinley specifically,” Senik said. The Cleveland biographer also said it‘s odd to characterize 1870-1913 as the period when we were a tariff country — because while that was a period when such protectionist levies were a major political issue, the federal government had been relying on tariffs “pretty much from the country’s founding.” A federal income tax didn’t come into effect for good until 1913, though one briefly existed around the time of the Civil War.
For lower- and middle-class Americans, life was getting better during 1870-1913, but it was still more difficult than today — with no unemployment insurance, no minimum wages, no restrictions on working hours and “very few protections for workers,” Meissner said. There were also more financial crises and panics, with the Federal Reserve established in 1913 to prevent or diminish them.
“The fault line, if you want to put it that way, between those earlier years and modernity was the Great Depression. What we learned in the Great Depression was you can’t run a modern economy like we used to run the 19th century,” the UC Davis economist told MarketWatch.
It wasn’t the tariffs
Trump is giving too much credit to tariffs as he talks about America’s strengths in the late 1800s, according to historians.
“That was a period of great economic growth and prosperity, but that doesn’t necessarily mean it was because we were funding our government through tariffs as opposed to income tax,” said Robert W. Merry, the author of “President McKinley: Architect of the American Century.”
Merry said a comment from one Republican senator from that period — Washington state’s John B. Allen — is instructive.
“He said there have been prosperous times and bad economic times in high tariffs and low tariffs. In other words, the tariff isn’t the end-all and be-all,” Merry told MarketWatch. “I think that’s one of the things that Trump doesn’t quite understand.”
“There were a lot of causes to America’s rise. Tariffs were not the reason,” added UC Davis’s Meissner. He said the key factors included growth in innovation, education and immigration. The incandescent light bulb, the telephone and the typewriter were among the major innovations of that era. “To those, we could add resources and just our cities, which were engines of diffusion of information.”
Meissner also emphasized that tariffs were both criticized and promoted in the late 1800s, as well as throughout U.S. history.
“It’s worthwhile thinking about who the winners and losers are from tariffs,” he said. “If we want an economy where lobbying is important — verging on corruption and favoritism and corporate welfare — we’ll go for tariffs. But if we want efficiency and innovation, I think low tariffs is the winning combination.”
Trump on Jan. 31 said the additional upcoming tariffs could include ones on oil and natural gas that hit around Feb. 18. He also said there would be tariffs in the coming months on steel, copper computer chips pharmaceuticals and the European Union’s products.
On Monday, China’s retaliatory tariffs on certain American products are due to take effect, with those duties coming after Trump’s new 10% levy on Chinese imports kicked in. Trump has agreed to a 30-day delay for new tariffs targeting imports from Canada and Mexico. He also has said he plans to announce reciprocal tariffs in the coming week.
Supporters of Trump’s tariffs include the Coalition for a Prosperous America, which maintains that they’re an “essential tool for rebuilding the U.S. industrial base, fostering long-term economic growth and reducing dependence on foreign imports.”