
When Tyler succeeded Harrison, at first he was in agreement with some of his party's economic policies. For example he signed into law a bill granting "squatters" rights to settlers on public land, a new bankruptcy law, and he also repealed the Independent Treasury that his predecessor Martin Van Buren had signed. But on the issue of banking, Tyler was soon at odds with the Congressional Whigs. The nation was still suffering from "the Panic of 1837", a significant recession. Twice Henry Clay had steered legislation through Congress for for a national banking act, and each time Tyler used his veto to kill the legislation, even though the second bill supposedly had been tailored to meet his stated objections in the first veto. Tyler proposed an alternative fiscal plan to known as the "Exchequer", but Clay was opposed to the idea, in part because Clay did not want to give Tyler stature to oppose Clay's bid for the Presidency in 1844.
On September 11, 1841, after the second bank veto, all of the members of the cabinet entered Tyler's office one by one and resigned, an action orchestrated by Clay, who hoped to force Tyler's resignation. The exception was Secretary of State Daniel Webster, who remained to finalize what became the 1842 Webster-Ashburton Treaty, and also to demonstrate his independence from Clay. On September 13, when the President did not resign, the Whigs in Congress expelled Tyler from the party. Tyler was heavily criticized in Whig newspapers and received hundreds of letters threatening his assassination. Whigs in Congress even refused to allocate funds for the repair of the White House, which had fallen into a terrible state of disrepair.
By mid-1841, the federal government faced a projected budget deficit of $11 million. Tyler saw the answer to the problem as being higher tariffs, but he wished to stay within the 20% rate created under the 1833 Compromise Tariff. He supported a plan to give to the states any revenue from the sales of public land, as an emergency measure to manage the states' growing debt, even though this would cut federal revenue. The Whigs also supported high protectionist tariffs and national funding of state infrastructure, and so Tyler and Congress were able to reach a compromise. The Distribution Act of 1841 created a distribution program, which put a ceiling on tariffs at 20 percent and increased tariffs to that level on previously low-taxed goods.
Despite these measures, by March 1842 it had become clear that the federal government was still in dire fiscal straits. Tyler believed that it would be necessary to override the Compromise Tariff of 1833 and raise rates above the 20 percent limit. This would require suspending the distribution program, with all revenues from the sale of federal lands going to the federal government. But the Whig Congress would not raise tariffs in a way that would affect the distribution of funds to states. In June 1842 they passed two bills that raised tariffs and extended the distribution program. Tyler felt that it was wrong to continue distribution at a time when federal revenue shortage required increasing the tariff, so he vetoed both bills. The Whigs were furious with Tyler and Congress tried again to raise tariffs but keep the distribution program, combining the two into one bill. Tyler vetoed it again, to the outrage of the Whigs in Congress.
This time the Whigs were unable to override Tyler veto. Something still had to be done about the huge deficit so Congress passed a bill restoring tariffs to 1832 levels and ending the distribution program. Tyler signed the bills.
Shortly after the tariff vetoes, Whigs in the House of Representatives initiated the first impeachment proceedings against a president in American history. It was clear to most reasonable persons that the grounds required under the Constitution for impeachment were lacking and the attempt was purely political. But until the presidency of the Andrew Jackson, Presidents rarely vetoed bills, and then generally on constitutional rather than policy grounds. Tyler's actions also went against the Whigs' idea that the president should allow Congress to make policy decisions. Representative John Minor Botts of Virginia, who was a political opponent of Tyler, introduced a resolution on July 10, 1842. It alleged several charges against the President and called for a nine-member committee to investigate his behavior, with the expectation of a formal impeachment recommendation. But even Henry Clay found this measure to be too much, though he said that he considered Tyler's impeachment to be "inevitable". The Botts bill was tabled until the following January, when it was rejected, 127−83.
A House select committee headed by former President John Quincy Adams, who was then a member of Congress, condemned Tyler's use of the veto and assailed his character. Adams was an ardent abolitionist, and disliked Tyler for being a slaveholder. The Adams committee's report did not formally recommend impeachment, but it spoke of the possibility. In August 1842, by a vote of 98–90, the House endorsed the committee's report. Adams sponsored a constitutional amendment to change the two-thirds requirement in each house to override a veto to a simple majority, but neither house passed such a measure. The Whigs were unable to pursue further impeachment proceedings in the subsequent 28th Congress, as in the elections of 1842 they lost control of the House (although they retained a majority in the Senate).

While John Tyler is a complicated study as President, he does deserve credit for standing up to congress, for asserting the rights of a Vice-Presidency to assume the full mantle of the Presidency upon the death or resignation of the President, and for expanding the use of the power of the veto. He also deserves credit for refusing to let the office of the Presidency become the property of congress, and in doing so he strengthened an important component in the nation's system of checks and balances, making it clear that the Executive is a separate but equal branch of government.