Tariffs may be much less than White House projects

President Donald Trump speaks before signing the executive order in the Oval Office on March 6, 2025.

Alex Huang | NebraskaDailyNews

President Donald Trump says tariffs will make the United States a “Rich“But these wealth may be far less than the White House expected.

The final payment could have a significant impact on the U.S. economy, national debt and legislative negotiations on the tax cuts, economists say.

White House trade adviser Peter Navarro estimated Sunday that tariffs would raise about $600 billion a year, $6 trillion in a decade. Automatic tariffs will increase by another $100 billion a year. He said On Sunday Fox News.

Navarro plans to announce more tariffs on U.S. trading partners on Wednesday.

Economists expect the Trump administration’s tariff policy to generate much lower income than Navarro’s claims. Some people predict that the total income will be less than half.

Moody’s chief economist Mark Zandi said about $600 billion to $700 billion a year is “not even in the field of what’s possible.” “If you hit $100 billion to $200 billion, you’ll be lucky.”

The White House declined to respond to NebraskaDailyNews’s request for comment on tariff revenue.

The “psychological mathematics” behind tariff income

There are big question marks on the scope of tariffs, including details such as quantity, duration, product and affected countries – all of which are related to the total revenue.

White House Tariffs for most imports are being considered, The Washington Post reported Tuesday. President Trump has brought the idea to the surface. The Trump administration may eventually choose different policies, such as national tariffs based on each country’s respective trade and non-trade barriers.

But tariff rates appear to be consistent with Navarro’s revenue forecast, economists say.

USA import In 2024, there will be approximately $3.3 trillion in commodity. Tax rates of 20% on all of these imports will generate approximately $660 billion in annual revenue.

“Peter Navarro is doing some crucial steps,” said Ernie Tedeschi, economic director of Yale’s budget lab and former chief economist at the White House Economic Advisory Board.

Peter Peter Navarro, trade adviser to U.S. President Donald Trump, spoke outside the White House on March 12, 2025 in Washington, DC.

Kayla Bartkowski | NebraskaDailyNews

This is because accurate income estimates must explain many of the economic impacts of tariffs in the United States and around the world, economists say. These effects, they say, collectively reduce income.

Tedeschi said that considering the Yale Budget Lab’s claim, taking into account these effects, widespread tariffs of 20% each year would be raised about $250 billion per year (or $2.5 trillion in a decade) analyze Published on Monday.

Economists say there are multiple ways to raise larger sums – but they will involve higher tariff rates. For example, a comprehensive tariff would raise about $780 billion a year, according to economist at the Peterson Institute for International Economics.

Even that, they wrote, is an optimistic assessment: This does not account for a decrease in U.S. economic growth due to retaliation or the negative growth impact of the tariffs themselves.

Why will revenue fall below expectations

General tariffs Increase consumer prices. According to Yale University’s Budget Lab, the average cost for the average consumer is $3,400 to $4,200.

Economists say that if consumers cost more, consumers will naturally buy less imported goods. They said lower demand means less import revenue from these imports and less tariff revenue.

Robert McClelland, senior fellow at Urban-Brookings Tax Policy Center, said tariffs are also expected to trigger “reduce economic activity.”

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For example, U.S. companies that do not pass tariff fees to consumers through higher prices may damage profits (their income tax drops), economists say. Economists say consumers may back off spending, further weakening company profits and tax revenues. They say companies that have been hit financially may fire workers.

Foreign countries are expected to retaliate against tariffs on U.S. products, which will harm companies that export products abroad. Other countries may have a downturn, further reducing demand for U.S. products.

“If you get a 20% tariff rate, you get a tough recession that will ruin your finances,” Zandi said.

Economists say there may also be some degree of violation of tariff policies and engraving for certain countries, industries or products. For example, when the White House imposed tariffs on China in February, it exempted “de Minimis” imports worth $800 or less indefinitely.

Economists say the Trump administration may also pay tariff revenues to certain parties who are bothered by the trade war.

President Trump did this during his first term: The government paid $61 billion to U.S. farmers facing retaliatory tariffs, almost all of which are tariff revenues for Chinese goods from 2018 to 2020 (92%) according to to the Council on Diplomatic Relations.

Economists say tariffs may also have short lifespans, diluting their potential income impact. They say whether it is President Trump or future presidents, they are issued by executive orders and are easily revoked.

“The probability that these tariffs will last for 10 years is zero,” Zandi said. “I would be very surprised if they last until next year.”

Why this matters

Tedeski said the Trump administration has shown that tariffs “will be one of the top ways they try to offset a package of tax cuts.”

Extending the 2017 tax cut law signed by President Trump will cost $4.5 trillion in ten years. according to Go to the Tax Foundation. Trump also called for other tax breaks, such as no tax on tips, overtime pay or Social Security benefits, and tax breaks on interest on car loans made in the U.S.

Economists say that if the tariffs don’t pay the full cost of such packages, Republican lawmakers will have to find cuts or increase the country’s debt elsewhere.

(Tagstotranslate) Donald Trump (T) Tariffs