Generating Revenue Does Not Mean Tariffs are “Working”
According to the Wall Street Journal, the United States collected around $22 billion in revenue from tariffs in May 2025 and around $16 billion in revenue from tariffs in April 2025 (Here’s How Much Money the U.S. Is Earning From Tariffs, in Charts - WSJ). If you chart the duties collected over the last decade, no months have seen higher tariff returns than May and April 2025.
This surge in tariff proceeds is hardly a cause for celebration. For one, it is clear that this is not a fruitful long-term strategy for generating tax revenue. The WSJ notes that imports from Mexico, Canada, and China are all beginning to drop because of the tariffs. As import volumes decline, the revenue will steadily decline as well. Trump has repeatedly stated that he wants to replace the income tax with tariffs. While the idea of eliminating personal income taxes may sound appealing, this would become a disaster as the federal government would have to borrow even larger sums of money than it already does to make up the loss of revenue by switching to tariffs. And yes, I understand that we should cut spending, but the Trump administration has shown no serious attempt to cut spending so they should be held accountable for proposing unsound tax policy.
Applauding these additional levies on imports is misleading and ignores the economic harm they cause. I’ve previously discussed how poor public policy can inflict harm. When the government increases taxes, it reduces both consumer and producer surplus due to deadweight loss. I fully acknowledge that there are tradeoffs in policy making, and that taxes are needed to fund the government, but Trump’s tariffs are generating revenue by undermining productive commerce.
Proponents of tariffs might view them as taxing other countries such as Canada and Mexico, and therefore no harm is being done to the U.S. In their eyes we are essentially getting revenue at no cost to ourselves. This view is shortsighted as it fails to take into account what those imports are being used for. Many businesses in the U.S need those imports either as intermediary goods in their production pipelines, or simply as products that are specific to their business. If you dined at an Italian restaurant, you’d likely expect wine from Italy, not California, wouldn’t you?
While the U.S. may have added to its coffers in recent months through tariffs, this windfall is likely short-lived and could ultimately reduce overall tax revenue by stifling economic activity. We shouldn’t let the Trump administration frame this as a success story, because it isn’t. And I hope you won’t either.
