NEW YORK, May 19 (WSH) — President Donald Trump’s renewed push to replace income taxes with tariffs is facing growing skepticism from economists, who say the plan is both fiscally unrealistic and likely to deepen America’s dependence on Chinese goods.
A Revival of Border Tariffs as Main Revenue?
Trump has floated the idea of abolishing federal income taxes for individuals earning under $200,000 and replacing them with border tariffs collected by a new “Office of Tariff Revenue.” He claims this would make foreign exporters pay for the U.S. government’s expenses.
“This would be a feast,” Trump declared on his social platform, suggesting that tariffs could offset a significant portion of federal tax burdens for middle- and low-income Americans.
Economists: Tax Burden Falls on Americans, Not Foreigners
But experts warn this vision is misleading. Studies, including a 2020 report by the Federal Reserve Bank of New York, show that tariffs during Trump’s first term were largely paid by U.S. businesses and consumers in the form of higher prices and reduced profits.
Revenue Projections Fall Far Short of Promises
While tariff revenues have increased—reaching $47 billion so far in 2025 according to U.S. Treasury data—this still represents only a fraction of the $4.9 trillion in annual federal revenue. Trump advisor Peter Navarro claimed tariffs could raise $6 trillion over ten years, based on a flat 20% tax on all imports. Economists call this assumption deeply flawed.
Independent models tell a different story:
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Wharton’s budget model estimates a maximum of $290 billion per year, even including paused tariffs.
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Yale’s Budget Lab predicts only $180 billion annually.
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The Tax Foundation offers a conservative estimate of $140 billion per year.
Even with a massive 145% tariff on Chinese imports—already beyond the revenue-maximizing point on the Laffer curve—annual revenue gains would rise only slightly compared to the current 30% rate.
Modern Budget, Outdated Tools
Replacing the federal income tax, which brought in $2.4 trillion in 2024 and is projected to rise to $4.4 trillion by 2035, would require much more than tariffs can deliver. Exempting earners below $200,000 would lead to a $737 billion annual shortfall, two to three times higher than any plausible tariff revenue.
In practice, removing income tax for lower brackets would shift benefits to higher earners due to lowered marginal tax rates—contradicting the policy’s populist narrative.
Conclusion: A Risky Trade-Off
Unlike the early 20th century—when tariffs covered government spending equal to just 2% of GDP—today’s economy is far more complex. With federal spending now around 20% of GDP and global supply chains deeply intertwined, reliance on tariffs is seen as economically dangerous.
Ironically, experts warn that depending on tariffs could make America even more reliant on imports from China—the very dynamic Trump’s policy aims to resist.
