Tariff
In contrast, in economic theory tariffs are viewed as a primary element in international trade with the function of the tariff being to influence the flow of trade by lowering or raising the price of targeted goods to create what amounts to an artificial competitive advantage. When tariffs are viewed and used in this fashion, they are addressing the country's and the competitors' respective economic healths in terms of maximizing or minimizing revenue flow rather than in terms of the ability to generate and maintain a competitive advantage which is the source of the revenue. As a result, the impact of the tariffs on the economic health of the country are at best minimal but often are counter-productive.
Presidency of George Washington
One of the most pressing issues facing the First Congress during its inaugural session was the issue of how to raise revenue for the federal government. Because direct taxes were politically unfeasible, Congress turned to the tariff as the main source of funding. The tariffs could also protect nascent American manufacturing by increasing the cost of imported goods, many of which came from Britain. Each region sought favorable terms for the duties on various goods. Because the federal government would be unable to even pay the salaries of its officials without passage of the bill, members of Congress were strongly motivated to reach a compromise. In July, Congress finally passed the Tariff of 1789, which Washington signed into law. The act created a uniform impost on goods carried by foreign ships, while also establishing a much smaller tax on goods carried by American-owned ships. The tariffs established by this and later acts would make up the vast majority of government revenue; more than 87 percent of the federal government's revenue between 1789 and 1800 came from import duties.