The Underwood Tariff Act (1913) was Progressive legislation under Woodrow Wilson that sharply lowered protective tariffs for the first time since the Civil War and made up the lost revenue with a graduated federal income tax, reflecting Progressive goals of curbing monopoly power and reforming the economy.
The Underwood Tariff Act of 1913 was one of Woodrow Wilson's first big legislative wins after the 1912 election. It dropped average tariff rates significantly, the first real cut to protective tariffs since before the Civil War. Why did that matter? Progressives argued that high tariffs were basically a subsidy for big business. They shielded American monopolies from foreign competition, which let trusts keep prices high. Lowering the tariff was supposed to force those companies to actually compete.
Here's the catch: tariffs were the federal government's main source of revenue. Cut them, and you need money from somewhere else. The Underwood Tariff solved that by including a graduated federal income tax, which had just been made constitutional by the 16th Amendment (also 1913). So one law did two Progressive things at once. It attacked the economic privilege of big business, and it shifted the tax burden toward wealthier Americans through an income tax that scaled with earnings.
This term lives in Topic 7.4 (The Progressives) in Unit 7: Progressivism to WWII, 1890-1945, and it directly supports learning objective APUSH 7.4.A, which asks you to compare the goals and effects of the Progressive reform movement. The Underwood Tariff is a perfect 'effect' to pair with a 'goal.' Goal: reduce the power of monopolies and economic inequality. Effect: lower tariffs plus a graduated income tax. It's also strong evidence for the broader Unit 7 theme of expanding federal involvement in the economy. Before this era, the government mostly stayed out of regulating economic winners and losers. The Underwood Tariff shows Washington deliberately reshaping who pays for government and who gets protected. If an essay prompt asks how Progressives changed the relationship between government and the economy, this is one of your cleanest examples.
Keep studying APUSH Unit 7
Federal Income Tax (Unit 7)
The Underwood Tariff is the law that actually put the income tax into practice. The 16th Amendment made an income tax constitutional, but it was the Underwood Tariff that wrote one into law to replace lost tariff revenue. Amendment grants the power, statute uses it.
1912 Presidential election (Unit 7)
Wilson ran on his 'New Freedom' platform promising to break up concentrated economic power. The Underwood Tariff was the first major delivery on that promise, so it's your go-to evidence that the 1912 election had real policy consequences.
Tariff (Units 6-7)
Tariff fights were THE economic issue of Gilded Age politics, with Republicans defending high protective rates and Democrats attacking them. The Underwood Tariff is the moment the anti-protectionist side finally won, which makes it great continuity-and-change evidence across Periods 6 and 7.
Progressive Movement (Unit 7)
Pair this with the 17th, 18th, and 19th Amendments as the cluster of structural reforms Progressives pushed at the federal level. Most of those changed politics; the Underwood Tariff is the one that changed how the government itself gets paid.
No released FRQ has used 'Underwood Tariff Act' by name, but that's exactly how this term works on the exam. It's evidence, not a topic. In multiple choice, it shows up inside questions about Wilson's New Freedom, Progressive economic reform, or the shift away from protectionism. In essays, it earns you points as specific evidence. For an LEQ or DBQ on Progressive goals and effects (APUSH 7.4.A territory), naming the Underwood Tariff and explaining what it did (lowered tariffs, added a graduated income tax) is much stronger than vaguely saying 'Progressives passed economic reforms.' It also works in continuity-and-change arguments about federal economic policy from the Gilded Age into the twentieth century.
Both happened in 1913 and both involve the income tax, so they blur together. The 16th Amendment is the constitutional change that gave Congress the power to tax incomes without apportioning it among the states. The Underwood Tariff Act is the ordinary law that used that new power, creating an actual graduated income tax while cutting tariff rates. Think of it this way: the amendment unlocked the door, the tariff act walked through it. On an MCQ, 'authorized an income tax' points to the amendment; 'lowered tariffs and enacted an income tax' points to Underwood.
The Underwood Tariff Act of 1913 lowered protective tariffs for the first time in decades and created a graduated federal income tax to replace the lost revenue.
It was a signature achievement of Woodrow Wilson's New Freedom agenda after his win in the 1912 election.
Progressives backed the tariff cut because high protective tariffs shielded monopolies from competition and kept consumer prices high.
The income tax in the act was made possible by the 16th Amendment, ratified earlier in 1913, but the act is what actually put the tax into effect.
On the exam, it works as specific evidence for APUSH 7.4.A, showing how Progressive goals of economic reform translated into real federal legislation.
It marks a long-term shift in how the federal government funds itself, moving away from tariffs and toward income taxes.
It substantially lowered protective tariff rates, the first major reduction since the Civil War era, and created a graduated federal income tax to make up the lost revenue. It was a centerpiece of Woodrow Wilson's New Freedom program.
Sort of, and this is the trap. The 16th Amendment (1913) gave Congress the constitutional power to tax incomes, but the Underwood Tariff Act is the law that actually enacted a graduated income tax using that power. The amendment authorized it; the act implemented it.
The 16th Amendment is a constitutional change permitting a federal income tax; the Underwood Tariff is regular legislation that cut tariff rates and put an actual income tax in place. Both date to 1913, which is why exams love testing whether you can tell them apart.
They saw high protective tariffs as a giveaway to big business. Tariffs blocked foreign competition, which let monopolies and trusts charge consumers more. Cutting tariffs was meant to restore competition, fitting the Progressive goal of attacking concentrated economic power.
It falls under Topic 7.4 (The Progressives) in Unit 7 and supports learning objective APUSH 7.4.A. You're most likely to use it as specific evidence in an essay about Progressive reforms or Wilson's presidency rather than see it as a standalone question.
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