Trump sets tariff revenue record

CBO says tariffs can offset spending by $3 trillion over the next decade

Since Trump returned to office five months ago, the federal government has collected $106 billion from tariffs and related customs fees, Axios reported.

That’s more than the $83 billion the U.S. collected all of last year.

In fact, that’s more than the USA has ever collected in a FULL year as Trump broke the record of $102 billion collected in 2022.

Axios said, “At current levels, annual collections are pacing ahead of the administration’s own estimates.

“Treasury Secretary Scott Bessent and trade advisor Peter Navarro have previously estimated tariffs could generate north of $300 billion in revenue.”

Previously, Axios reported, “The tariff increases announced through May 13 would reduce the cumulative budget deficit by $3 trillion, the CBO said, or $2.8 trillion after adjusting for the hit they cause to growth and investment.

“CBO also calculated that the tariff policies will increase inflation by 0.4 percentage points in 2025 and 2026, ‘reducing the purchasing power of households and businesses.’ ”

That $3 trillion in additional revenue more than wipes out that claim by CBO that the one Big Beautiful Bill will add $2.4 trillion to the national debt.

Of course, the BBB deficit is based solely on making the existing 2017 tax cut permanent, which is why Democrats and other supporters of Red China hate the bill. That tax cut reduced the capital gains tax which made returning corporate headquarters to the United States more viable.

Voting against BBB will raise taxes and does reject spending cuts. I have no idea why Elon Musk wants to raise taxes and opposes cutting spending, but I believe he is out of his league on this one.

But what about inflation from tariffs?

What about it?

Axios said, “CBO also calculated that the tariff policies will increase inflation by 0.4 percentage points in 2025 and 2026, ‘reducing the purchasing power of households and businesses.’ ”

Oh no!

That means if you spend $100 a week on groceries, those same groceries will cost you $100.40 a week next year.

Then there is that recession the media has been hoping for. The stock market hit all-time record highs less than 3 months after Trump announced his reciprocal tariff plan.

But what would a multi-billionaire know about making money?

Economist Torsten Sløk wrote, “As we approach the Trump administration’s self-imposed 90-day deadline for trade deals, markets are starting to speculate about what comes next. The longer uncertainty remains elevated, the more negative its impact on the economy, as shown in the chart below.

“Maybe the strategy is to maintain 30% tariffs on China and 10% tariffs on all other countries and then give all countries 12 months to lower non-tariff barriers and open up their economies to trade.

“Extending the deadline one year would give countries and U.S. domestic businesses time to adjust to the new world with permanently higher tariffs, and it would also result in an immediate decline in uncertainty, which would be positive for business planning, employment, and financial markets.

“This would seem like a victory for the world and yet would produce $400 billion of annual revenue for U.S. taxpayers. Trade partners will be happy with only 10% tariffs and U.S. tax revenue will go up. Maybe the administration has outsmarted all of us.”

Maybe.

The press reports that negotiations are slow ahead of his July 9 deadline to avoid higher tariffs.

Bloomberg said, “The European Union is willing to accept a trade arrangement with the US that includes a 10% universal tariff on many of the bloc’s exports, but wants the US to commit to lower rates than that on key sectors such as pharmaceuticals, alcohol, semiconductors and commercial aircraft.

“The EU is also pushing the U.S. for quotas and exemptions to effectively lower Washington’s 25% tariff on automobiles and car parts as well as its 50% tariff on steel and aluminum, according to people familiar with the matter.”

The report said, “the EU has until July 9 to clinch a trade arrangement with Donald Trump before tariffs on nearly all of the bloc’s exports to the U.S. jump to 50%.”

Access to the U.S. market should come with a price.

10% sounds a tad low to me.

50% sounds about right.

But given his track record, I will trust Trump on this one and frankly every other issue.

If my argument doesn’t convince you, the words of Nobel-winning economist Paul Krugman on April 3 should:

The key point is that Trump isn’t really trying to accomplish economic goals. This should all be seen as a dominance display, intended to shock and awe people and make them grovel, rather than policy in the normal sense.

Again, I’m not being snobbish here. When the fate of the world economy is on the line, the malignant stupidity of the policy process is arguably as important as the policies themselves. How can anyone, whether they’re businesspeople or foreign governments, trust anything coming out of an administration that behaves like this?

Next thing you’ll be telling me that Trump’s people are planning military actions over insecure channels and accidentally sharing those plans with journalists. Oh, wait.

I’d like to imagine that Trump will admit that he messed up, cancel the whole thing, and start over. But he won’t, because that would spoil the dominance display. Ignorant irresponsibility is part of the message.

His post had great words, nice charts and even a clip of Tony Bennett singing.

But the best part of Krugman’s post was that he was wrong, wrong, wrong and 3 months later, that wrongness gave us all that smug feeling of being smarter than the expert.

The best part of Trump’s tariff policy is that it works.