Overview

• President Trump reiterated his goal of eliminating federal income taxes, focusing on households earning less than $200,000, funded by increased tariff revenue.
• Economists estimate tariffs would need to rise to at least 100%—and potentially as high as 200%—on all imports to replace the $3 trillion in annual income tax revenue.
• The U.S. effective tariff rate currently stands at 22.8%, already the highest among developed nations, with a 145% tariff on Chinese goods halting most trade with China.
• The administration plans to abolish the IRS and create an 'External Revenue Service' while directing tariff revenue toward national debt reduction.
• Critics warn that escalating tariffs could significantly raise consumer prices, reduce imports, and ultimately undermine the revenue base needed to achieve these goals.