Tariffs can recruit much less than White House projects, economists say

President Donald Trump says that Tariffs will make the US “rich“But these riches will probably be much smaller than the White House expects, the economists said.

The final amount can have major consequences for the US economy, the debt of the nation and legislative negotiations for a tax package, economists said.

White House trading adviser Peter Navarro on Sunday estimates that tariffs will raise about $ 600 billion a year and $ 6 trillion a decade. Automatic tariffs will add another $ 100 billion a year, he said on “Fox News Sunday.”

Navarro made the projection like the United States plans to announce More tariffs against US trading partners on Wednesday.

Economists expect the Trump administration’s tariff policy to generate a much lower amount of revenue than Navarro’s claims. Some projects total revenue would be less than half.

Approximately $ 600 billion to $ 700 billion a year, “it’s not even in the opportunity,” said Mark Zandy, Moody’s chief economist. “If you reach $ 100 billion to $ 200 billion, you’ll be very lucky.”

The White House declined to respond to a CNBC comment on Tariff Revenue.

The White House think about 20% tariff for most imports, The Washington Post reported Tuesday. President Trump sailed This idea along the campaign path. The Trump administration can ultimately choose a different policy, such as the country’s tariffs on countries based on the relevant trade and non-trade barriers.

But the 20% tariff rate seems to be aligned with Navarro’s revenue forecasts, economists said.

USA imported About $ 3.3 trillion goods in 2024, the application of a 20% tariff rate for all this import will lead to about $ 660 billion annual revenue.

“This almost certainly makes the mental mathematics that Peter Navarro is doing – and that mental mathematics skips some decisive steps,” says Ernie Tedeski, director of the Economy at Yale’s budget laboratory and a former chief economist at the White House Economic Advisers Council during Biden’s administration.

This is because the accurate assessment of revenue must take into account the many economic impacts of tariffs in the US and around the world, economists said. These effects are combined to reduce revenue, they said.

A 20% wide tariff will raise about $ 250 billion a year (or $ 2.5 trillion a decade) when they take these effects, according to Tedeschi, citing a budget laboratory at Yale Analysis Posted on Monday.

There are ways to increase larger sums -but they would include higher tariff rates, economists said. For example, a 50% board fare will raise about $ 780 billion a year, According to to economists at the Institute of International Economics of Peterson.

Even this is an optimistic assessment: it does not take into account the more economic growth of the United States due to revenge or the negative effects of growth from the tariffs themselves, they wrote.

Tariffs usually raising prices for consumersS A 20% wide tariff will cost the average consumer from $ 3,400 to $ 4,200 a year, according to a budget laboratory in Yale.

Consumers would naturally buy less imported goods if they cost more, the economists said. The less demand means less import and less tariff revenue than this import, they said.

Tariffs are also expected to cause “reduced economic activity,” said Robert McCleland, a senior associate at the Urban-Brookings Tax Policy Center.

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For example, US companies that do not pass tariff costs for consumers through higher prices are likely to see profits (and their income taxes fall), economists said. Consumers can withdraw the cost, further profits of the company for indentation and tax revenue, economists said. Companies that take a financial blow can release workers, they said.

Foreign countries are also expected to avenge their own tariffs for US products, which would harm companies that export products abroad. Other countries may experience an economic decline, further reducing the demand for American products.

“If you receive a tariff rate, you will receive a RIP-RORING recession and this will undermine your fiscal situation,” Zandy said.

There is also likely to be a certain level of non -compliance with tariff policy and carved for certain countries, industries or products, economists said. For example, when the White House imposed tariffs for China in February, this unstitted DE minimis imports worth $ 800 or less.

The Trump administration may also target some tariff revenue to pay off certain countries affected by a trade war, economists said.

President Trump did this in his first term: the government sent $ 61 billion for “relief” to US farmers who were confronted with retaliatory tariffs, which were almost all (92%) of Chinese goods rates from 2018 to 2020, According to of the Council on External Relations.

Tariffs are also likely to have a short life period, destroying their potential impact on revenue, economists said. They are issued by executive order and can be easily canceled, whether by President Trump or a future president, they said.

“There is a zero probability that these rates will last 10 years,” Zandy said. “If they continue until next year, I will be very surprised.”

Extension of the 2017 Tax Reduction Act signed by President Trump will cost $ 4.5 trillion per decade, According to to the Tax Foundation. Trump has also called for other tax breaks, such as no taxes on advice, overtime pay, or social security benefits and deduction of taxes for a car loan for cars made by Americans.

If the tariffs do not cover the full price of such a package, then Republican MPs will have to find cuts elsewhere or increase the debt of the nation, the economists said.