<P> The tariff history of the United States spans from colonial times to present . The first tariff law passed by the U.S. Congress, acting under the then recently ratified Constitution, was the Tariff of 1789 . Its purpose was to generate revenue for the federal government (to run the government and to pay the interest on its debt), and also to act as a protective barrier around domestic industries . An Import tax was collected by treasury agents before goods could be landed at U.S. ports . </P> <P> Tariffs have historically served a key role in the nation's foreign trade policy . They were the greatest (approaching 95% at times) source of federal revenue until the Federal income tax began after 1913 . For well over a century the federal government was largely financed by tariffs averaging about 20% on foreign imports . There are no tariffs for imports or shipments from one state to another . Since the 1940s, foreign trade policies have focused more on reciprocal tariffs and low tariff rates rather than using tariffs as a significant source of Federal tax revenue . </P> <P> Tariffs were the main source of revenue for the federal government from 1789 to 1914 . During this period, there was vigorous debate between the various political parties over the setting of tariff rates . In general Democrats favored a tariff that would pay the cost of government, but no higher . Whigs and Republicans favored higher tariffs to protect and encourage American industry and industrial workers . Since the early 20th century, however, U.S. tariffs have been very low and have been much less a matter of partisan debate . </P> <P> Prior to the American Civil War tariffs were generally low, but rose during its duration . At the end of the end of the war in 1865 about 63% of federal revenue was generated by excise taxes, which exceeded the 25.4% generated by tariffs . In 1915 during World War I tariffs generated 30.1% of revenues . Since 1935 tariff income has continued to be a declining percentage of Federal revenues . </P>

How did us government run before income tax
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