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Home»Finance News»Trump’s New Tariffs Would Raise Half His Earlier Version, TPC Finds
Finance News

Trump’s New Tariffs Would Raise Half His Earlier Version, TPC Finds

April 12, 2025No Comments3 Mins Read
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Trump’s New Tariffs Would Raise Half His Earlier Version, TPC Finds
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TOPSHOT – US President Donald Trump holds a signed executive order on reciprocal tariffs during an … More event in the Rose Garden on April 2, 2025. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)

AFP via Getty Images

President Trump’s decision to “pause” some of his tariffs while further raising import taxes on Chinese goods would cut in half the amount of revenue his April 2 levies could raise, according to a new analysis by the Tax Policy Center.

TPC found Trump’s latest plan would raise about $1.7 trillion for the 10 years from 2026 through 2035, plus an additional $125 billion for the remainder of 2025. The analysis assumed Trump’s latest tariff policy would be permanent, although Trump said his newly announced delay would last only 90 days.

It assumed the President would eliminate his “reciprocal” import taxes but continue his 10 percent tariff on worldwide trade and maintain higher tariffs on many goods from Canada and Mexico and on products such as steel, aluminum, and autos and auto parts; and raise tariffs on Chinese goods to 145 percent.

Shrinking Revenue

TPC estimated the tariffs Trump announced through April 2 would have raised about $3.3 trillion from 2026-2035, plus an additional $190 billion for the remainder of 2025. Even his more robust version would have raised only about half the $6 trillion to $7 trillion predicted by top White House trade adviser Peter Navarro.

TPC’s projection excludes the effects of tariffs imposed on US goods by trading partners in retaliation for Trump’s import taxes. While it accounts for lower income and payroll tax revenues from a decline in corporate profits and wages, it does not reflect how much those changes would slow the overall economy. If the estimate included retaliation and broad economic impacts, tariff revenues would be even lower.

Conflicting Goals

The falling tariff revenue from Trump’s decision to retreat from his more aggressive levies is yet another example of the president’s conflicting goals: imposing stiff import taxes to boost US manufacturing, raising revenue to pay for his ambitious tax cuts, but doing so while not slowing domestic consumer demand and the overall US economy.

Backing off a large piece of his tariff agenda will ease some pressure on the US economy but limit incentives for US consumers to Buy American or for US firms to manufacture more in the US. And the more modest import taxes will raise far less revenue than tougher tariffs. At the same time, levies this high on Chinese goods would sharply reduce US imports of those products and sharply reduce any revenue they’d collect.

Trump is trapped. To ease economic and financial market fears, he had little choice but to back away from his most aggressive tariff plans. But, as the TPC analysis shows, the decision could substantially reduce the pot of money he’d have to pay for the tax cuts he desires.

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See also  How Will Trump’s Tariffs Impact Small Businesses?
Earlier finds Raise tariffs TPC Trumps Version
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Next Article How small businesses can survive tariffs, according to a supply chain expert

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