President Donald Trump has high aspirations for his tariffs, going so far as to suggest increased taxes on imports could replace income taxes.
“There’s a real chance,” he told Fox Noticias on April 15. “There is a chance that the money from tariffs could be so great that it would replace (the income tax).”
The idea may sound appealing, but economists who spoke to USA TODAY say Trump’s tariffs would struggle to raise enough money to eliminate income taxes in full.
“A full replacement is absolutely, mechanically impossible. The math just doesn’t work,” said Erica York, vice president of federal tax policy at the Tax Foundation, a center-right think tank.
Consumers face an overall average effective tariff rate of 28%, the highest since 1901, according to the Yale Budget Lab.
Estimates for how much money these tariffs will bring in vary. Peter Navarro, Trump’s senior counselor for trade and manufacturing, said they could bring in as much as $6 trillion over the next 10 years, or roughly $600 billion per year. The Yale Budget Lab said the tariffs would bring in less than half that, at an estimated $2.4 trillion over the next decade.
Either way, those figures pale in comparison to the more than $2 trillion collected from individual income taxes each year, per the Congressional Budget Office.
Economists said one problem is that tariffs are drawing from a smaller pool of money. American taxpayers reported nearly $15 trillion in adjusted gross income in 2022, according to Internal Revenue Service data. Meanwhile, the U.S. imported roughly $3 trillion worth of goods that year.
“If you tariff everything from everywhere, you’re going to get revenue generated,” said Keith Maskus, a professor emeritus of economics at the University of Colorado Boulder and specialist in international trade analysis. “But the scale of it just isn’t big enough.”
A drone view shows a cargo ship at Kwai Tsing Container Terminals in Hong Kong, China, April 16, 2025.
Even if Trump were to hike tariffs further, the math “is impossible,” according to Ernie Tedeschi, director of economics at the Yale Budget Lab.
A tariff is a tax imposed on goods imported from another country. Though Trump has said foreign countries foot the bill, it’s the importers ‒ often U.S. companies ‒ that pay these taxes. The higher the tariff, the more likely it is that companies will try to reduce their imports. While that could bolster Trump’s plan for more U.S.-based manufacturing, it would also hurt federal revenue.
“You end up with this mathematical problem, that the more you increase the tariff rate, the more you drive down the tax base,” said Kimberly Clausing, a nonresident senior fellow at the Peterson Institute for International Economics, a nonpartisan think tank.
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Complications from a trade war, such as retaliatory tariffs from trade partners and increased risks of a recession, would further shrink other sources of revenue by decreasing employment rates and output, according to Maskus.
The White House did not respond to a request for comment.
Between 1870 and 1913 – the year federal income tax became law – tariff revenue tended to bounce between 40% and 60% as a share of total receipts, according to a 2024 analysis by the White House Council of Economic Advisers.
Trump has looked back on this period of American history fondly, telling Fox Noticias, “that’s when our nation was relatively the richest. We were the richest.”
It’s not clear what Trump means by richest. While there was rapid economic growth during the Gilded Age, GDP per capita is higher today, according to inflation-adjusted data from the University of Oxford’s Our World in Data project.
Economists also note the country operated very differently in the 19th century, with no social security benefits, no Medicare, and a much smaller military.
“What people expect from their government is much bigger, and much more, than it was 150 years ago,” Tedeschi said.
Secretary of Commerce Howard Lutnick told CBS News in March that Trump’s goal with tariffs is “no tax for anybody who makes less than $150,000 a year.”
While no income tax on just that segment of the population could appeal to lower- and middle-class Americans, York warned it’s a “bad trade.”
Federal income taxes are progressive, which means taxpayers with a higher income pay a higher rate. Just 12% of the bottom fifth of households by income paid federal income tax in 2023, according to an estimate from the Urban-Brookings Tax Policy Center. Many receive more money back from refundable tax credits than they pay in income taxes.
Meanwhile, a Yale Budget Lab report suggests tariffs hit lower-income households particularly hard because they pay a larger share of their income on basic goods that would go up in price.
“If you get rid of the income tax for low-income people, presumably you’re also getting rid of those refundable tax credits and instead making them pay tariffs,” York said. “You would be making a lot of people worse off than they are now.”
The Peterson Institute for International Economics calculated that tariffs could, at most, replace 40% of income tax revenues, but even that would require high tariffs that are likely to drive a recession, according to Clausing.
Clausing believes we’re more likely to see tariff revenue backfill a portion of Trump’s planned tax cuts, which includes an extension to the 2017 Tax Cuts and Jobs Act and creating new tax breaks, such as no tax on tips, overtime or Social Security benefits.
Trump’s tax priorities are estimated to cost between $5 trillion and $11.2 trillion over the next decade, according to the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group.
Trump rolls out new tariffs: Where does the tariff money go?
Another idea floated by lawmakers is replacing income taxes with a broader consumption tax on goods and services.
In 2023, a group of House Republicans attempted to pass a measure that would have eliminated most federal taxes with a national sales tax, a form of consumption tax. The measure never reached a vote in the full House or Senate, as previously reported by USA TODAY.
Project 2025, a conservative policy blueprint, also advocates for consumption taxes.
Proponents say switching to a consumption tax would end the tax bias against saving and investment, while critics say these taxes tend to be regressive and would hurt lower-earning households.
“Economists say it’s more efficient because you get a higher level of saving and investment,” York said. But “you’d need to design it in a way that protects lower- and middle-income taxpayers. You can do that through things like really large exemptions or rebates.”
This article originally appeared on USA TODAY: Can tariff revenue replace income taxes? Here’s what economists say
