President Donald Trump’s tariff increases will cause a slump in US trade volumes that’s likely to limit the scope of the extra revenue the federal government can expect to reel in, new projections show.
All of the tariffs Trump has imposed, along with those he has threatened, since January would generate around US$300 billion ($405.89 billion) in annual revenue on average, according to an analysis from Bloomberg Economics. That’s at the low end of the range, with Treasury Secretary Scott Bessent having floated a figure of up to US$600 billion.
The lower figure reflects expectations for a sharp downturn in trade. As a result of tariffs, total US imports of goods are expected to drop by around 30%, according to Bloomberg Economics' modeling.
The nonpartisan Tax Foundation released its own analysis that found Trump’s tariffs could produce nearly US$2.27 trillion in revenue over a decade, or about US$227 billion on average each year, after accounting for the economic effects.
Separately, the Yale Budget Lab estimates all of Trump’s tariffs announced so far could raise nearly US$2.49 trillion over a decade, or US$249 billion on average each year, including the impacts of retaliatory tariffs as of April 2 and considering the broader projected economic impact.
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Figures in USD. Chart: Bloomberg
Trump last week announced a 10% tariff on all imports, while also imposing additional duties on about 60 US trading partners, including a 34% levy on imports from China, a 20% duty on the European Union and 24% on Japan. The baseline 10% tariff is already in place while the higher duties on selected countries are slated to take effect after midnight New York time.
The new duties are in addition to those previously announced, including a 25% tariff on imports from Canada and Mexico and 25% tariffs on aluminum, steel and auto imports.
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The anticipated revenue from those import duties are an initial glimpse at how much US companies and consumers can expect to collectively pay. The figures also serve a political purpose — granting Republicans a way to justify an upcoming round of tax cuts that are projected to add trillions of dollars to US deficits over a decade.
Trump’s tariffs mark the steepest American duties in more than a century. Trump has said his trade policies will “make America wealthy again,” and pledged that they will grow the country’s industrial base.
But economists have warned the tariffs could have the opposite effect, serving as a drag on US imports, inviting retaliation from other countries and raising prices for consumers.
The Tax Foundation projects Trump’s tariffs will reduce US gross domestic product by 0.7%. After factoring in retaliatory tariffs, the drag on GDP could be even bigger, the group said.
The added increase in consumer prices in the short run would result in a nearly US$3,800 loss of purchasing power per household on average, according to a Yale Budget Lab analysis.
Other countries have already begun to impose their own duties on the US, including China — which announced it will levy a 34% tariff on all US imports in addition to previous targeted actions.
