Latest government data showed tariff revenue fell for the first time since President Donald Trump imposed huge import taxes in April.
According to the Ministry of Finance monthly statement Data released Wednesday showed the government imposed $30.75 billion in tariffs in November, down from $31.35 billion in October. In April, following the announcement of a sweeping sweep Taxation on “Liberation Day”tariff revenue soared to about $15.6 billion and has increased every month, peaking in October.
Revenues fall after government decision reduce taxes Grocery staples like bananas and coffee have suffered as Trump grapples with an ongoing cost-of-living crisis exacerbated by tariffs. The Trump administration also struck trade deals that lowered tariffs.
In addition to lower tariff rates, import volumes have also weakened, meaning fewer goods are being taxed. U.S. container imports decline A year-on-year increase of 7.5% in October and another Growth in November was 7.8% Data released this week by supply chain software company Descartes Systems Group showed that demand for exports from China weakened. it follows a Import surge Earlier this year, companies tried to advance shipments before tariffs took effect.
But as Trump argued Negative sentiment is growing In terms of how he navigates the economy, his efforts to lower tariffs to improve affordability could threaten his moonshot plan to use tariff revenue for other priorities.
Trump’s lofty tariff revenue plan
Chief among the numerous uses proposed by the President for tariff revenues are Reduce the country’s growing national debtIt surpassed the $38 trillion mark in October. National Economic Council Director Kevin Hassett, a frontrunner to become the new Fed chair, said earlier this month that “the bulk of the Treasury’s revenue” comes from tariffs, which ultimately have the ability to reduce the U.S. debt burden.
Trump said tariff revenue would be so high that in addition to hitting the U.S. debt burden, the government would be able to Issue $2,000 rebate check To Americans.
and after announcing $12 billion farm aid package For farmers hurt by tariffs, Trump also said the relief package would be funded in part by a small share of tax revenue.
“We’re going to give back the tariffs because we’ve literally gained trillions of dollars, and we’re going to provide significant dividends to the people in addition to reducing the debt,” Trump said at a December Cabinet meeting. “As you know, I inherited a lot of debt, but it’s a pittance compared to the numbers we’re talking about.”
add numbers
But Trump has recently rolled back tariffs on some groceries and earlier this year on China and the European Union, a blow to his debt-reduction plans, and the Congressional Budget Office predicts the tariffs will be reduced Eliminate approximately $800 billion Debt is expected to decrease over the next 10 years. The agency revised its forecast based on an estimated tariff rate falling to 16.5% from 20.5% in August.
Independent research also shows that Trump’s tariffs have brought in far less revenue than the White House expected. According to a recent analysis by Pantheon Macroeconomics, these tariffs generate about $400 billion in revenue annually, $100 billion less than finance minister scott besant Expected in August. Pantheon said imports from China fell sharply as companies favored conventional products produced through countries with lower tariffs such as Vietnam, which was the main reason for the decline.
Jay Shambaugh, a nonresident senior fellow at the Brookings Institution and a professor of economics and international affairs at George Washington University, questioned the idea of using tariffs to raise funds.
in a Commentary In an article published by the Brookings Institution last month, he argued that for the United States to gain substantial revenue from tariffs, the taxes would have to distort the economy, requiring the country to invest more in industrial production, which could hit productivity. Like Pantheon, he warned that inconsistent tax rates across countries and goods could easily lead U.S. countries to evade tariffs by seeking out products from countries less affected by them.
“Trying to make it a permanent source of income will be costly,” he said. “It’s going to hurt consumers. It’s going to hurt America’s most productive businesses. It’s going to lower economic growth. And it’s going to damage America’s relationships with people around the world.”