President Trump’s extensive tariffs have already started to generate a significant amount of money for the federal government, a new source of revenue for a heavily indebted nation that American policymakers may start to rely on.
Over time, analysts expect that the tariffs, if left in place, could be worth more than $2 trillion in additional revenue over the next decade. Economists overwhelmingly hope that doesn’t happen and the United States abandons the new trade barriers. But some acknowledge that such a substantial stream of revenue could end up being hard to quit.
“I think this is addictive,” said Joao Gomes, an economist at the University of Pennsylvania’s Wharton School. “I think a source of revenue is very hard to turn away from when the debt and deficit are what they are.”
Mr. Trump has long fantasized about replacing taxes on income with tariffs. He often refers fondly to American fiscal policy in the late 19th century, when there was no income tax and the government relied on tariffs, citing that as a model for the future. And while income and payroll taxes remain by far the most important sources of government revenue, the combination of Mr. Trump’s tariffs and the latest Republican tax cut does, on the margin, move the United States away from taxing earnings and toward taxing goods.
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