Washington:US President Donald Trump recently expressed optimism about the potential for tariffs to generate substantial revenue, possibly even replacing income tax. In a conversation with Fox Noticias, Trump highlighted the significant financial gains from tariffs, drawing parallels with the late 19th century when the US imposed tariffs and amassed considerable funds. “There is a chance that the money is so great that it could replace” income tax, Trump stated, referencing the period between 1870 and 1913 when tariffs were the primary source of revenue.
During this era, the US experienced unprecedented wealth, with Trump noting, “And that’s when our nation was relatively the richest. We were the richest.” However, Trump acknowledged that any changes to income tax would require Congressional approval, as the legislative body oversees tax policy. Trump’s goal is to utilise tariff revenue to support a tax bill that would exempt tips and Social Security from taxation, among other campaign promises. He emphasised the substantial revenue potential, saying, “It could replace the income tax, that’s the kind of money”.
Trump also discussed a historical committee established to manage excess revenue, stating, “And this committee’s sole purpose was how to dispose of it, who to give it to, what do we do? And then, brilliantly, in 1913, they went to the income tax system.” He further noted that attempts to revive tariffs in the 1930s were unsuccessful, and the Great Depression was incorrectly blamed on tariffs, when in fact, it predated the tariffs.
Regarding tariff revenue, Trump said, “Billions and billions of dollars and, hundreds of billions of dollars over a period of a year.” He also referenced the significant daily revenue generated from tariffs, stating, “Before I gave a little bit of a pause to lower just a little bit because, you know, it’s a transition. You have to be, you have to have a little flexibility. But we were making two billion and three billion dollars a day. We never made money like that.”
The Trump administration has temporarily halted reciprocal tariffs imposed on nations for 90 days, following Trump’s announcement that there would be no pause on tariffs and only negotiations. Meanwhile, the US has imposed 245% tariffs on China, reflecting the ongoing tariff dispute between the two nations.