President Donald Trump has insisted that millions of Americans might see their income taxes cut as a result of his sweeping tariffs.
In a Truth Social post Sunday morning, the president claimed many families will see their income taxes “substantially reduced” or even “completely eliminated” once Washington begins to see revenue from his self-described “reciprocal” tariff policy.
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Trump said the administration would focus on reducing income taxes for individuals making less than $200,000 a year.
“It will be a BONANZA FOR AMERICA!!! THE EXTERNAL REVENUE SERVICE IS HAPPENING!!!” Trump wrote, touting new jobs creation.
Trump announced sweeping tariffs on dozens of nations set to be enacted earlier this month, placing a universal 10% tariff rate on most goods imported into the U.S. Additional tariffs vary by country, with China seeing rates as high as 145%.
Most of these tariffs have yet to be implemented, as Trump announced a 90-day pause in order to give countries more time to come to a deal with Washington for potentially lower rates.
The tariffs have sent waves of uncertainty throughout the global economy, as many fear the downstream effects of the high rates — such as higher costs of goods within the U.S.
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Trump has repeatedly said revenue from the tariffs will offer relief to American tax payers, floating it as a replacement for the income tax.
However, economists are skeptical as to whether this could actually work.
When looking at those earning less than $150,000, a study conducted by the Council on Foreign Relations found that tax revenue generated from these Americans is around $576 billion. As imports to the U.S. are expected to decline with Trump’s existing tariff rates, the study found that revenue from these duties would be $65 billion short to cover taxes for the bottom 90% of U.S. earners.
In March, White House trade adviser Peter Navarro claimed that the U.S. could see tariff revenue of up to $600 billion annually.
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Many experts doubt it will actually reach that high.
“If you get to $100 billion to $200 billion, you’ll be pretty lucky,” Mark Zandi, chief economist at Moody’s, told CNBC.