Tariff
A tariff is a tax on imports or exports between sovereign states. It is a form of regulation of foreign trade. It is a policy that taxes foreign products to encourage or protect domestic industry. It helps limit trade deficits. The tariff is historically used to protect infant industries and to allow import substitution industrialization.
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.