Trump: Tariffs Could Make Income Tax a Thing of the Past for Many Americans

Posted by The News Pulse April 27, 2025 Post a Comment

Topline

President Donald Trump stated on Truth Social post On Sunday morning, "the income taxes for many individuals could see significant reductions, potentially being fully eliminated," as soon as tariff-generated revenues start flowing in—although economists differ on this point. remain skeptical .

Key Facts

In his post, Trump stated that the "emphasis will be on individuals earning under $200,000 annually," which surpasses four times the median personal income in the U.S. for 2023, as reported by the Census Bureau. data ..

As of April, even though numerous tariffs have been suspended while the Trump administration endeavors to negotiate with various nations, the Department of Homeland Security has continued to proceed. collected $15.86 billion in customs and excise duties, marking an rise of approximately $6 billion compared to the figure for March.

Trump also said a “massive number of jobs are already being created, with new plants and factories currently being built or planned.”

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Crucial Quote

"It will be a BOON for AMERICA!!! THE EXTERNAL REVENUE SERVICE IS GOING TO TAKE PLACE!!!" Trump stated in his Sunday morning posting.

Can Tariffs Yield Sufficient Revenue to Counterbalance Income Tax?

It’s unclear, but economists say it’s unlikely. One study from the Council on Foreign Relations said the claim that tariffs could completely replace income tax is “absurdly off-base, since it is mathematically impossible” to generate the necessary revenue even at the U.S.’ current import rates. That study found tax revenue for the bottom 90% of Americans is around $576 billion, and estimated that after fewer countries import to the U.S. because of tariffs, there won’t be enough revenue generated to offset the income taxes of the bottom 90%.

How Much Revenue Will the Tariffs Generate?

That remains uncertain since the Trump administration mentions they are still in talks regarding rates with numerous nations. Back in January, following Trump's announcement of a 10% tariff on goods coming from China and a 25% tariff on those imported from both Mexico and Canada, the Committee for a Responsible Federal Budget addressed this issue. reported The tariffs have the potential to boost this year’s revenue by $140 billion and generate $1.5 trillion by the end of fiscal year 2035. However, most tariffs on Canada and Mexico were put on hold, with China’s latest tariff rate remaining unchanged. 145% In early April, President Trump's White House trade advisor, Peter Navarro, claimed that tariffs could generate approximately $600 billion annually. However, economists contend that this figure may be overly optimistic. CNBC reported. The Yale Financial Research Laboratory estimated as of April 15 the tariffs to date this year will raise $2.4 trillion from 2026-2035, but will have “$631 billion in negative dynamic revenue effects.”

Key Background

Trump mentioned the possibility of tariff revenue eliminating U.S. income taxes at a meeting with Republican lawmakers in June Before his re-election bid for the presidency, Trump allegedly proposed that the tariff funds would suffice to abolish all income taxes. However, more recently, he has modified this stance to suggest that these tariffs would only remove income taxes for less affluent citizens. As late as April 15th, Trump stated during an address, Fox News interview, “there is a chance that the money from tariffs could be so great that it would replace [income tax].”

Tangent

A poll from The Washington Post, ABC News and Ipsos released Friday found that almost two out of three Americans don’t approve of Trump’s handling of tariffs. The poll, which surveyed more than 2,400 U.S. adults, found 64% disapprove of how Trump is handling tariffs on imported goods, with 96% of Democrats and 25% of Republicans disapproving.

The News Pulse