A forklift transports shipping containers among stacks of containers in Hamburg Port in Hamburg, Germany, April 15, 2025.
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Tariff tax base is ‘a lot smaller’ than income tax
Some policy experts have questioned how much revenue the duties could bring in, compared with the federal income tax.
“The tariff tax base is a lot smaller than the income tax base,” Kimberly Clausing, a senior fellow at the Peterson Institute for International Economics, told CNBC.
In 2023, the U.S. imported $3.1 trillion of goods, according to a report Clausing co-authored in June. By comparison, the government levied tax on more than $20 trillion in income, the report said.
White House trade advisor Peter Navarro in late March estimated tariffs could raise roughly $600 billion a year.
But that figure “is not even in the realm of possibility,” Mark Zandi, chief economist at Moody’s, told CNBC earlier this month. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”
To compare, the IRS has collected $1.14 trillion in individual income taxes for fiscal year 2025 through March 31, according to Treasury data.
“Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax,” Clausing co-wrote in the Peterson Institute’s report.
Plus, at higher tariff rates, people will buy fewer imported goods, which reduces revenue, Clausing told CNBC: “That’s part of the point of the policy.”
The Trump administration did not respond to CNBC’s request for comment.
Other factors can lower tariff income
As tariff rates increase, other factors can decrease how much revenue the U.S. ultimately collects, experts say.
“The administration seems to think that every time it raises the tariff rate that it can collect more revenue,” the Tax Foundation’s Durante said. “And that’s not always the case.”
Direct tariff revenue is lowered by behavioral and other economic factors, according to a Tax Foundation report published April 15.
The Tax Foundation estimates that a 10% universal tariff would raise $2.2 trillion through 2034. However, the same tariff would reduce U.S. gross domestic product by 0.4%, which affects revenue, it said.
The International Monetary Fund on Tuesday reduced 2025 U.S. growth projections to 1.8% from 2.7% based on trade tensions.