Overview
- In Thanksgiving remarks to service members, President Trump said the U.S. could substantially or even completely cut income taxes within a few years by using tariff revenue, and he again touted at least $2,000 in tariff dividend checks.
- Treasury data show about $195 billion in tariffs were collected in fiscal 2025, with a little over $400 billion projected for 2026, versus $2.66 trillion from individual income taxes in 2025.
- Economists from the Tax Foundation and Peterson Institute say the numbers do not support replacing income taxes with tariffs, and Treasury Secretary Scott Bessent has said the tariffs are not meant to generate profit and will shrink over time.
- The Congressional Budget Office estimated in June that the tariff program would reduce federal deficits by roughly $2.8 trillion over the next decade, far less than annual income tax receipts.
- The policy faces legal risk as the Supreme Court reviews Trump’s authority after lower courts struck parts of the program, and several lawmakers have indicated any tariff proceeds should go first to deficit reduction.