Toward the end of his first term in office, Jackson was forced to confront the state of South Carolina, the most important of the emerging Deep South cotton states, on the issue of the protective tariff. Business and farming interests in the state had hoped that the president would use his power to modify the 1828 act that they called the Tariff of Abominations.  In their view, all its benefits of protection went to Northern manufacturers, leaving agricultural South Carolina poorer.  In 1828, the state's leading politician – and Jackson's vice president until his resignation in 1832 – John C. Calhoun had declared in his South Carolina Exposition and Protest that states had the right to nullify oppressive national legislation.

In 1832, Congress passed and Jackson signed a bill that revised the 1828 tariff downward, but it was not enough to satisfy most South Carolinians.  The state adopted an Ordinance of Nullification, which declared both the tariffs of 1828 and 1832 null and void within state borders. Its legislature also passed laws to enforce the ordinance, including authorization for raising a military force and appropriations for arms.  Nullification was a long-established theme of protest against perceived excesses by the federal government.  Jefferson and Madison had proposed it in the Kentucky and Virginia Resolutions of 1798, to protest the Alien and Sedition Acts.  The Hartford Convention of 1814 had invoked it to protest the War of 1812.  Never before, however, had a state actually attempted nullification.  The young nation faced its most dangerous crisis yet.

In response to South Carolina's threat, Jackson sent seven small naval vessels and a man-of-war to Charleston in November 1832. On December 10, he issued a resounding proclamation against the nullifiers. South Carolina, the president declared, stood on "the brink of insurrection and treason," and he appealed to the people of the state to reassert their allegiance to the Union.  He also let it be known that, if necessary, he personally would lead the U.S. Army to enforce the law.

When the question of tariff duties again came before Congress, Jackson’s political rival, Senator Henry Clay, a great advocate of protection but also a devoted Unionist, sponsored a compromise measure. Clay's tariff bill, quickly passed in 1833, specified that all duties in excess of 20 percent of the value of the goods imported were to be reduced year by year, so that by 1842 the duties on all articles would reach the level of the moderate tariff of 1816.  At the same time, Congress passed a Force Act, authorizing the president to use military power to enforce the laws.

South Carolina had expected the support of other Southern states, but instead found itself isolated.  (Its most likely ally, the state government of Georgia, wanted, and got, U.S. military force to remove Native-American tribes from the state.)  Eventually, South Carolina rescinded its action. Both sides, nevertheless, claimed victory.  Jackson had strongly defended the Union.  But South Carolina, by its show of resistance, had obtained many of its demands and had demonstrated that a single state could force its will on Congress.