President Donald Trump's tariffs are bad. But even if one were opposed to the tariffs on principle, they might be seduced by the revenue they generate and the potential of that revenue to make some progress toward reducing the deficit. The tariffs are expected to collect $300 billion annually—nearly matching the amount collected by the corporate income tax ($350 billion). It's not a small amount of money. Trump has stated that his goal is to eliminate income taxes and replace them with tariff revenue.
Last month, Trump and Sen. Josh Hawley (R–Mo.) proposed tariff rebate checks, similar to the stimulus checks that were handed out during the COVID-19 pandemic, in an amount equal to the revenue that is to be collected—or possibly more. Hawley's legislation proposes sending at least $600 to eligible adults and dependent children, and Trump has voiced support for sending money to "people of a certain income level," who are most likely to spend that money quickly rather than save or invest it. This is a massively inflationary impulse, much like what we saw during the pandemic, and it will expand the deficit even more. This is a bad idea layered on top of bad ideas, and it will make the tax code even more progressive by effectively creating a negative income tax for those in the bottom tax brackets while fueling inflation.
