U.S. President Donald Trump has said he wants to “substantially” cut, and possibly eliminate, federal income taxes over the next couple of years by replacing that revenue with money from higher tariffs on imports. Economists and tax experts widely doubt that tariffs could realistically generate enough stable revenue to replace the roughly $2.4 trillion raised each year from individual income taxes.
What exactly Trump is proposing
Trump told U.S. military personnel in a Thanksgiving video call that soaring tariff income could allow the government to “substantially” cut or “maybe cut out completely” federal income taxes within the next two years. He argued that tariff revenues from foreign countries are now so large that Americans could shoulder far less of the tax burden directly, describing it as a return to a 19th‑century model when tariffs were the main federal funding source.
This idea is not new for Trump; he has talked since his 2024 campaign about abolishing or drastically reducing income taxes and using broad import tariffs in their place. His team has floated concepts like an “External Revenue Service” to manage tariff collections and has linked the plan to very high across‑the‑board tariffs, especially on Chinese goods.
How tariffs compare to income tax revenue
Federal data show a massive gap between what tariffs currently bring in and what income taxes provide. In 2024, individual income taxes generated about $2.4 trillion, while tariffs raised only around $200 billion—less than a tenth as much. Even optimistic projections that assume aggressive tariff hikes estimate something like $400–800 billion a year from duties, still far below total income tax collections.
Independent analyses suggest that even if tariffs were raised dramatically, import volumes would likely fall as trade shrank or shifted, which would limit how much extra revenue higher rates could actually produce. One estimate cited by tax researchers found Trump‑style tariffs might raise around $3.8 trillion over a decade versus more than $30 trillion from the income tax over the same period, implying large deficits if income taxes disappeared.
Key numbers at a glance
| Item | Approximate amount (recent data) | What it implies |
|---|---|---|
| Annual federal individual income tax | About $2.4 trillion | Main pillar of federal revenue |
| Current annual tariff revenue | Roughly $200 billion | <10% of income tax take |
| Aggressive tariff revenue scenarios | About $400–800 billion | Still far short of replacing income taxes entirely |
| Estimated 10‑year tariff revenue (high) | ≈ $3.8 trillion | Versus ≈ $33 trillion from income taxes |
What experts say about feasibility
Tax economists and budget analysts broadly call the idea mathematically unrealistic at the scale Trump suggests. Analysts warn that to match income tax revenue with tariffs alone, average import duties would need to be raised to levels that would sharply reduce trade, push up consumer prices, and likely trigger retaliation from other countries.
Experts also note that tariffs effectively act like a consumption tax, and a regressive one: lower‑ and middle‑income households spend a larger share of their income on goods, so they would feel higher prices on imported products more acutely than wealthier households. That means eliminating income taxes while relying on tariffs could shift the overall tax burden away from high‑income filers and more toward everyday consumers.
Political and legal hurdles
Even if revenue math could be made to work, Trump cannot unilaterally “turn off” the federal income tax. Eliminating or fundamentally rewriting the income tax code would require Congress to pass major tax legislation, and some changes could raise constitutional questions, making court challenges likely.
By contrast, presidents have more unilateral leeway on tariffs under existing trade laws, especially when invoking national security or emergency powers, which is why Trump has already been able to raise and adjust some tariffs without new legislation. The practical outcome is that partial cuts to certain types of income (like tips or overtime) and higher tariffs are far more plausible in the near term than a complete end to income taxes.
SOURCE
What this could mean for households
If Trump pushes ahead, the most realistic near‑term scenario would be targeted income‑tax relief for some groups, funded in part by higher tariffs, rather than the total abolition of income taxes. In that world, some workers could see lower withholding or special exemptions, while prices on many imported goods—from electronics to clothing—could rise as tariffs feed into retail costs.
For now, Trump’s remarks signal a political direction rather than a detailed, enacted policy: they aim to connect “lower taxes at home” with a tougher stance on trade abroad, even though the numbers show a full swap of income taxes for tariffs would be extremely difficult to achieve without large deficits or significant tax increases elsewhere.
