Tariffs as Fiscal Policy

Jeffrey Miron

President Donald Trump has claimed his tariffs will raise enough revenue to allow for income tax cuts.

Recent research, however, finds that even at optimal tariff rates, these tariffs

would raise an amount less than one-fifth of federal income tax revenue … generat[ing] efficiency losses nearly equal to the revenue raised.

Tariffs are also

regressive … [and] today’s tariffs are particularly high, variable, and uncertain. This raises compliance costs...