Even Now, Tariffs Are a Tiny Portion of US Government Revenue
President Trump has praised tariffs as a “great revenue producer for the US government.” But his tariffs on nearly $300 billion of US imports have so far increased the share of federal tax revenue derived from tariffs from 1 to only 2 percent. The increase in tariff revenue has been swamped by the decrease in corporate tax revenue collected following implementation of the Tax Cuts and Jobs Act of 2017. Tariff revenue has not been a major source of government revenue since 1914, when the federal income tax supplanted tariffs as a critical component of collections. Today, most federal revenue comes from individual and corporate income taxes, and social insurance and retirement payroll taxes.
This chart was adapted from Chad P. Bown and Douglas A. Irwin’s article, “Tariff revenue and Trump tweets — 5 things you need to know,” Washington Post MonkeyCage, July 16, 2019.