President Trump has been mumbling something lately about gazillions of dollars from his tariffs paying off the National Debt. I'd chalk it up to Trumpian Nonsense except that, prior to the current age of Free Trade Above All Else, tariffs made up something like half of all federal revenue. Could he be even somewhat correct?
You mean before the federal income tax when the federal government was a tiny fraction of its current size? True, but not a very useful comparison.
In principle yes. But he was not talking about US$, but Zimbabwean dollars. And he was not talking about the National Debt of the US. But put in the correct context, it is all somewhat correct.
Historically, tariffs were a major source of U.S. federal revenue before the income tax was introduced in 1913. In fact, for much of the 19th century, tariffs accounted for 80–90% of federal income. So it’s not “nonsense” to suggest they can still play a role in government funding. More importantly, Pr. Trump’s use of tariffs wasn’t just about revenue—it was a strategic tool. The tariffs on China, for example, were designed to correct trade imbalances, encourage on shoring of manufacturing, and make the U.S. less dependent on adversarial nations. Even if you don’t agree with the approach, it did result in billions in tariff revenue: according to the U.S. Treasury, over $75 billion was collected during his term. But at the time, Pr Trump never had full congressional support to realign federal spending either. While they are highly unlikely to eliminate the debt on their own in the modern era, the principal idea—that tariffs can contribute meaningful funds to the Treasury and thereby mitigate deficit pressure—is supported by both U.S. history and actual recent policy results
It wouldn't be nonsense if the federal government were still the same size as it was in 1913. But that's not the case.
Yes, and more. Tariffs are based on international trade. Such trade was a much smaller deal back then, with most (but not all) things being fabricated domestically. Also, there was virtually no services crossing interational borders (except some shipping). If the U.S. actually implented tariffs sufficient to (a) pay for the government and, thus, (b) eliminate income taxes, it would drive the world's economy into a deep, deep depression and would grind everything to a halt. On the other hand, is any country better prepared to compete in a free-trade economy than is the U.S.? Our economy dwarfs every other in the world.
