Trump: Tariffs Could Nearly Wipe Out the Income Tax

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The High Points:

• Trump says rising tariff revenue could “almost completely” eliminate U.S. income tax.

• CBO projects new tariffs will reduce deficits by $2.8 trillion over ten years.

• Administration proposes tariff dividend checks to show Americans direct benefits.

Trump has never been shy about big promises, but this one hits the political Richter scale: using tariff revenue to slash — or even eliminate — federal income taxes. And for once, the math isn’t coming from thin air. The Congressional Budget Office projects the new tariff structure will reduce deficits by $2.8 trillion over the next decade, driven by sweeping levies on Chinese imports, autos, metals, and nearly all low-value foreign shipments. That’s not pocket change — that’s Washington-level seismic.

Of course, the establishment will scream that tariffs are economic blasphemy, but the deficit numbers tell a different story. Commerce Secretary Howard Lutnick even floated the idea of tariff dividend checks so Americans can literally see where the money comes from. It’s bold, disruptive, and exactly the kind of political curveball Trump loves throwing.

If income taxes really do drop because foreign exporters are footing more of the bill? That’s a revolution in how the federal government gets funded.

From Breitbart:

President Donald Trump late Thursday said that the United States may “almost completely” eliminate the income tax due to the rising tariff revenue.

“In the next couple of years, I think we’ll substantially be cutting, or maybe cutting out completely, but we’ll be cutting income tax,” Trump said during an event on Thursday.

“Could be almost completely cutting it because the money we’re taking in is going to be so large,” he added.

The Congressional Budget Office (CBO) in June projected that the tariff increases will reduce the federal deficit by $2.8 trillion over the next decade.

Breitbart News Economics Editor John Carney wrote:

The tariff estimate covers measures implemented between January 6 and May 13, 2025. These include a 30 percent levy on imports from China and Hong Kong, 25 percent duties on autos, auto parts, steel, and aluminum, a 10 percent general tariff on most other imports, and the elimination of duty-free treatment for low-value Chinese shipments.

CBO estimates that, before accounting for economic side effects, the new tariffs will reduce primary deficits by $2.5 trillion and cut interest payments by another $500 billion, for a total deficit reduction of $3.0 trillion. After factoring in modest economic drag — slightly lower GDP and temporarily higher inflation — the net deficit reduction is pegged at $2.8 trillion.

Commerce Secretary Howard Lutnick in November said that Trump is proposing a tariff dividend check so that Americans understand the impact of Trump’s tariff policies.

“Well, look, the President wants to make sure the American people understand that the tariffs are there for their benefit, right? That it’s — yes, it’s going to drive down our deficit. Yes, it’s going to make the country stronger,” Lutnick said on Fox Business Network’s Kudlow show.

“But he wants the people of America, the American people to appreciate these tariffs, and he knows if he puts money into their pocket and says, ‘Look, this was paid for by the tariffs,’ they’ll better understand how important this is for America. And so, that’s why he’s talking about it.”

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