President Donald Trump has asserted that his extensive tariff strategy could lead to significant reductions in income taxes for millions of Americans.
In a recent Truth Social post, the president expressed optimism that numerous families might witness their income taxes being "substantially reduced" or even "completely eliminated" as Washington begins to accrue revenue from his so-called "reciprocal" tariff policy.
According to The Washington Examiner, Trump emphasized that his administration's focus would be on alleviating the tax burden for individuals earning less than $200,000 annually. "It will be a BONANZA FOR AMERICA!!! THE EXTERNAL REVENUE SERVICE IS HAPPENING!!!" he proclaimed, highlighting the potential for job creation as a result of this policy shift.
Earlier this month, Trump unveiled a comprehensive tariff plan targeting numerous countries, imposing a standard 10% tariff on most goods imported into the United States. Specific tariffs vary by nation, with China facing rates as steep as 145%. However, the implementation of these tariffs has been temporarily delayed by 90 days to allow for negotiations that could lead to reduced rates.
The announcement of these tariffs has introduced a degree of uncertainty into the global economy, sparking concerns about potential increases in the cost of goods within the U.S. Despite these apprehensions, Trump has consistently argued that the revenue generated from tariffs could serve as a substitute for income taxes, providing relief to American taxpayers. Nevertheless, economists remain skeptical about the feasibility of this approach.
A study by the Council on Foreign Relations examined the tax revenue generated from Americans earning less than $150,000, which amounts to approximately $576 billion. With the anticipated decline in imports due to Trump's tariff rates, the study projected that revenue from these duties would fall short by $65 billion in covering taxes for the bottom 90% of U.S. earners.
In March, White House trade adviser Peter Navarro suggested that the U.S. could potentially see tariff revenue reaching up to $600 billion annually. However, many experts, including Mark Zandi, chief economist at Moody's, express doubt about achieving such figures. "If you get to $100 billion to $200 billion, youll be pretty lucky," Zandi remarked to CNBC. As the debate continues, the effectiveness and impact of Trump's tariff policy remain under scrutiny.
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