Chicago – April 29, 2025
President Donald Trump, during remarks on Sunday night, restated a bold goal he and his administration have floated since the start of his second term: eliminating income taxes entirely, with revenue instead coming from tariffs.
“We’re going to make a lot of money and cut taxes for Americans,” Trump said before boarding Air Force One following Pope Francis’ funeral in Rome. “Eventually, we might be able to completely eliminate income taxes if tariffs generate enough money.”
While few enjoy paying income taxes, replacing them with tariffs presents major challenges.
To match the roughly $3 trillion the federal government earns annually from income taxes, the U.S. would need tariffs set at extremely high rates. Currently, America imports about $3 trillion in goods each year. That means tariffs would have to be at least 100% on all imports to cover lost tax revenue, explained Apollo Global Management’s chief economist, Torsten Slok. At present, U.S. tariffs average 22.8%, already the highest among developed nations, and increasing them fourfold could risk triggering a recession.
Moreover, simply hiking prices wouldn’t do the trick. As goods become more expensive, demand typically drops. Major U.S. companies have already reported that Trump’s trade policies are raising costs and discouraging consumer spending across the board, from airfare to fast food.
