US President Donald Trump’s aggressive tariff strategy is doing more than reshaping global trade—it’s quietly becoming a powerful new stream of revenue for the federal government. Customs duties and excise taxes brought in $152 billion through July, nearly double the amount from the same period last year, according to Treasury data. With more tariffs set to take effect August 7, revenue could climb even higher, the New York Times reported.
From trade war to tax windfall
While Trump has justified the tariffs as a tool to rebalance trade, they’ve also begun to offset losses from his sweeping tax cuts, which are expected to cost the federal government over $3.4 trillion. Economists estimate the tariffs could generate more than $2 trillion over the next decade if left in place—a tempting figure for a government weighed down by soaring debt.
“I think this is addictive,” said Wharton economist Joao Gomes. “When the deficit is what it is, it’s hard to walk away from that kind of cash.”
Shifting tax burdens—quietly and regressively
Trump has long admired the 19th-century US model, when tariffs were the primary funding source and income taxes didn’t exist. His policies, combined with Republican tax cuts, are nudging the country back in that direction—away from taxing earnings and toward taxing consumption. The result, experts warn, is a system that favours the wealthy.
Low-income Americans, who spend more of their earnings on consumer goods, end up bearing the brunt of higher import prices. “This is one of the most regressive shifts we’ve seen in decades,” one economist noted.
Rising prices and economic drag
As businesses pass the cost of tariffs onto consumers, inflation pressure is growing. And that’s only one part of the economic toll. Slower growth could shrink other tax revenues, offsetting some of the benefits. “There are better, more efficient ways to raise money,” said Ernie Tedeschi, a former Biden adviser. “But this is a political question, not just an economic one.”
Will Washington become hooked on tariffs?
Once a tariff is in place, it’s politically difficult to remove—especially if doing so would widen the deficit or force lawmakers to vote on new taxes. Democrats may criticize the tariffs in theory, but some are beginning to see the revenue as a tool to fund new programs without raising income taxes.
“The way Democrats are starting to think about it is: ‘Here’s a pot of money we can reprogram,’” said strategist Tyson Brody.
Rebates or relief?
Trump has floated the idea of sending rebate checks to Americans funded by tariff revenue. Senator Josh Hawley has already proposed a $600 rebate program. But critics question whether short-term political wins justify long-term damage to the economy.
In the end, even if tariffs deliver a financial windfall now, their broader economic effects—and the unfair burden they place on low-income households—raise the question: Is this a revenue stream the US should really depend on?
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