On Tuesday in Michigan, President Donald Trump promised that his policies and tariffs would bring a “golden age of America.” Trump often makes oversized promises that don’t deliver.

Last Sunday, for example, Trump made the extraordinary claim that one day, Americans won’t be paying any income taxes because the revenues from his tariffs will be sufficient to offset the revenues lost by eliminating the federal income tax. The president said, “It’ll take a little while before we do that, but we’re going to be cutting taxes, and it’s possible we’ll do a complete tax cut, because I think the tariffs will be enough to cut all of the income tax.”

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This isn’t serious commentary from the president. Plausible revenues from Trump’s tariffs would not come anywhere near to offsetting the revenues from the federal income tax. 

Data from the federal government’s most recent fiscal year, which ended Sept. 30, 2024, show that federal income tax revenues amounted to about $2.4 trillion. And in calendar year 2024, U.S. imports of goods on which tariffs can be applied totaled $3.295 trillion. 

Yes, Trump’s tariffs could generate substantial new revenues for the federal government, but the net gain would be reduced by the damage to the economy. Other nations would probably respond to Trump’s tariffs by imposing their own tariffs on U.S. exports, thus reducing American production. There are a lot of moving parts when you start a trade war.

We are witnessing the negative effects of Trump’s tariffs this week, with the negative GDP report from the federal government. In large part, Trump’s tariffs caused U.S. GDP growth to contract at 0.3% annually. Businesses rushed to bring in imports ahead of Trump’s tariffs. Trump’s tariffs will make the country poorer. 

Non-partisan economists have modeled the plausible effects of imposing tariff increases of 10%, 15%, or 20% on all goods imported into the United States.

A 15% across-the-board tariff would raise less than $400 billion a year in revenues for the federal government. But that revenue estimate does not take into account the negative effects of lower household consumption because of higher prices paid for imported goods. After all, a tariff is a tax, and taxes do reduce consumption and investment. Tariffs also raise prices, putting upward pressure on interest rates. Higher interest rates reduce business investment and lower personal consumption. 

Economists estimate that the actual revenue gain from a 15% tariff would be about $320 billion annually. That’s nearly eight times less than the $2.45 trillion raised by the federal income tax. Moreover, the revenue from a 15% tariff tax would shrink to $150 billion if foreign countries retaliated by imposing tariffs on U.S. exports. 

The negative revenue offsets are even higher if Trump imposed an across-the-board 20% tariff. The net annual revenue gain from such a 20% tariff would be about $80 billion, not remotely close to the $2.45 trillion raised by the federal income tax. To compound the fallacy of believing that tariffs could replace the federal income tax or even dramatically reduce federal taxes on most households is that the federal government is already running a massive annual federal deficit of about $2 trillion.

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The federal government needs more revenues, not less. Talk of cutting federal taxes is irresponsible. The federal deficit raises borrowing costs for consumers and businesses and is a significant drag on the U.S. economy.

Trump should not make promises he can’t keep. Pie-in-the-sky promises are bad for Trump and the nation.

James Rogan is a former U.S. foreign service officer who has worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be reached at [email protected].