Underwood Tariff Act of 1913 had which primary impact?

• A. Substantial reduction of tariff rates
• B. Increase of tariff rates on most imports
• C. Establishment of a central bank
• D. Prohibition of monopolistic practices

Answer: (A)

This question tests how the Underwood Tariff Act changed tariff policy. The act lowered tariff rates significantly on many imports, marking a shift away from high protective tariffs toward a system that relied more on the federal income tax for revenue. To offset the loss in tariff income, Congress used the recently ratified 16th Amendment to establish a graduated federal income tax. This combination is the core impact: substantial reductions in tariff rates.

For context, the central bank was established later by the Federal Reserve Act, and antitrust goals against monopolies were pursued through other laws such as the Clayton Act, so those options don’t reflect the Underwood Tariff Act’s primary effect.