Tariffs in United States history have played different roles in trade policy and the nation's economic history. Tariffs were the largest source of federal revenue from the 1790s to the eve of World War I, until it was surpassed by income taxes.
The Tariff Act of 1789 imposed the first national source of revenue for the newly formed United States. The new Constitution allowed only the federal government to levy tariffs, so the old system of state rates disappeared. The new law taxed all imports at rates from 5 to 15 percent. These rates were primarily designed to generate revenue to pay the national debt and annual expenses of the federal government. In his Report on Manufactures Treasury Secretary Alexander Hamilton proposed a far-reaching plan to use protective tariffs as a lever for rapid industrialization. His tariff proposals were adopted (but not his schemes to subsidize factories.)<1>
The high protectionism Hamilton called for was not adopted until after the War of 1812 when nationalists like Henry Clay and John C. Calhoun wanted more industry so the nation would have a balanced economy. In wartime, they declared, having a home industry was a necessity. Likewise owners of the small new factories that were springing up in the northeast to produce boots, hats, candles, nails and other common items failed to obtain higher tariffs that would significantly protect them from more efficient British producers. A 10% discount on the tax was offered on items imported in American ships, so that the American merchant marine would be supported.<2>
Once industrialization started, the demand for higher and higher tariffs came from manufacturers and factory workers. They believed that Americans should be protected from the low wages of Europe. Every Congressman was eager to logroll a higher rate for his local industry. Senator Daniel Webster, formerly a spokesperson for Boston's merchants who imported goods (and wanted low tariffs), switched dramatically to represent the manufacturing interests in the Tariff of 1824. Rates were especially high for bolts of cloth and for bar iron, of which Britain was a low-cost producer. The culmination came in the Tariff of 1828, ridiculed by free traders as the "Tariff of Abominations", with duties averaging over 50 percent. Intense political reaction came from South Carolinians, who concluded that they would pay more for imports and sell less cotton abroad, so their economic interest was being unfairly injured. They attempted to "nullify" the federal tariff and spoke of secession (see the Nullification Crisis). The compromise that ended the crisis included a lowering of the tariff over ten years to a uniform 20% in 1842.<3>
http://en.wikipedia.org/wiki/Tariffs_in_United_States_history