Key features of the Underwood-Simmons Tariff Act include:
1. Tariff Reductions: The act significantly lowered tariffs on a wide range of imported goods. On average, tariffs were reduced from about 40% to 26%, representing the first major downward revision in tariffs since 1846.
2. Tariff Commission: The act established a permanent, bipartisan Tariff Commission. The commission was tasked with investigating the effects of tariffs and making recommendations to the president and Congress on future tariff policy.
3. Gradual Implementation: The tariff reductions under the act were phased in gradually over several years. This was done to provide industries and workers affected by the tariff cuts time to adjust.
4. Income Tax: The act introduced a graduated income tax as a means of offsetting potential revenue losses due to the tariff reductions. The income tax placed a higher tax burden on higher-income earners.
The Underwood-Simmons Tariff had several significant impacts:
1. Lower Prices: By lowering tariffs, the act reduced the cost of imported goods, leading to lower prices for consumers. This stimulated consumer demand and helped boost the overall economy.
2. Increased Competition: The influx of cheaper imported goods increased competition in the domestic market, putting pressure on domestic industries to become more efficient and competitive.
3. Controversial Provisions: Some provisions of the act, such as the reduction of tariffs on sugar, were controversial and faced strong opposition from domestic industries and producers. These controversies contributed to the subsequent shift in public opinion in favor of raising tariffs.
4. Impact on Revenue: The tariff reductions resulted in a decline in government revenue, necessitating the introduction of the income tax to compensate.
5. Reaction from Political Parties: The Republican Party, which had historically supported higher tariffs, strongly opposed the Underwood-Simmons Tariff. This opposition played a role in the Republican victory in the 1916 presidential election.
Overall, the Underwood-Simmons Tariff Act represented a significant shift toward lower tariffs and had a substantial impact on trade and economic policies in the United States during the early 20th century.