Trump tariffs generating meaningful new U.S. revenue

Committee for a Responsible Federal Budget
https://www.crfb.org

On Aug. 7, the Trump Administration finalized a new set of “reciprocal tariff rates” that generally range from 10 to 41 percent. Assuming they remain in place, these and a variety of previously implemented tariffs (including a 10 percent baseline “reciprocal tariff”) and recently-announced trade agreements are likely to generate significant revenue. 

Those funds should be used for deficit reduction – not new tax cuts, spending, or rebates – and those who wish to reduce or reverse the tariffs should put forward alternative sources of deficit reduction to replace them.

In this analysis, we find:

• Monthly tariff revenue has more than tripled, from $7 billion late last year to about $25 billion in July and is on course to rise substantially in the coming months.

• The new tariffs introduced by the current Trump Administration will generate an estimated $1.3 trillion of net new revenue through the end of his term and $2.8 trillion through 2034, before accounting for economic effects – about $600 billion more than the tariffs in effect as of May.

• The U.S. Trade Court has ruled some of these tariffs illegal, pending appeal. If the ruling is upheld, the remaining tariffs could raise as little as $800 billion through 2034.

• Depending on the legal outcome, recent tariff increases will generate 0.2 to 0.8 percent of GDP of net new revenue through 2034 under conventional scoring.

Importantly, our estimates are very rough and intended to reflect the general magnitude of the policies rather than precise scores, given the complexity of the tariffs and their impacts.

Estimates also exclude macroeconomic effects, which could reduce the net (real) deficit reduction from tariffs to the extent they lead to slower growth and higher inflation. Nonetheless, the recent tariff increases are likely to meaningfully reduce deficits if allowed to remain in effect or replaced on a pay-as-you-go (or Super PAYGO) basis.

Tariffs are Generating Significant Revenue

Since 1940, tariffs have generated only a small amount of revenue for the federal government. Prior to the first Trump Administration, for example, tariffs were generating about $3 billion per month. Largely due to tariffs put in place during that Administration – including on Chinese goods and steel and aluminum – monthly tariff revenue grew to about $7 billion per month in the year prior to this Administration. Since then, revenue has expanded dramatically.

Over the course of 2025, President Trump has used various executive powers to enact or increase a large number of tariffs. Through mid-May, these included a 10 percent additional baseline tariff on most imports, a 25 percent rate on automobiles and auto parts, a 25 percent tariff on steel and aluminum, a 25 to 10 percent tariff on non-USCMA goods from Canada and Mexico, and a 30 percent tariff on most Chinese goods.

Since mid-May, President Trump has announced a number of additional tariffs, either imposed unilaterally or through trade deals. 

These include new “reciprocal rates” for many countries that vary from 10 to 41 percent, raising the rate on steel and aluminum products to 50 percent, enacting a 50 percent tariff on copper, increasing the 25 percent rate on Canada to 35 percent, reaching a trade deal with the European Union in which most goods are tariffed at 15 percent, and announcing other trade deals with countries such as the United Kingdom, Japan, and Indonesia.

Monthly tariff revenue has grown in kind, from $7 billion (0.3 percent of GDP) per month late last year to about $25 billion (1.0 percent of GDP) in July (the total revenue impact will be smaller, as the tariffs will cause income and payroll tax revenue to decline). We expect tariff revenue to grow further and ultimately rise to $40 to $50 billion per month (over 1.5 percent of GDP), before declining some as supply chains adjust.

Through Fiscal Year (FY) 2034, we estimate these tariffs will impose an average effective tariff rate of about 17 percent. That’s up from 2.3 percent in calendar year 2024 and 1.5 percent back in 2015.

The Congressional Budget Office (CBO) has estimated that tariffs in effect as of May 13 would generate $2.5 trillion of revenue through 2035 before accounting for economic effects, which is equal to about $2.3 trillion through 2034. We estimate the additional tariffs enacted and announced since CBO’s June score will generate another $600 billion through 2034, if they remain in effect.

In total, we estimate the tariffs will generate about $1.3 trillion over the course of President Trump’s term in office and $2.8 trillion through FY 2034, if they remain in effect. This is the equivalent of $3.1 trillion through FY 2035. These estimates are similar to Yale Budget Lab’s estimate of $2.7 trillion over ten years. Tax Foundation’s conventional revenue estimate of $2.3 trillion through 2034 differs mainly due to the inclusion of a 125 percent tariff on China, which is high enough to actually reduce revenue.

Source: Committee for a Responsible Federal Budget estimates mainly based on data from the Congressional Budget Office and U.S. Census Bureau. 

The Committee for a Responsible Federal Budget is a nonpartisan, non-profit organization committed to educating the public on issues with significant fiscal policy impact.