Tariffs To Replace Income Tax? Why Trump's Recent Statement Has Raised Speculations
While the tariffs have created ripples globally, the news might turn out to be positive for the Americans. Trump has suggested that the tariffs might raise enough funds to replace federal income tax.
US President Donald Trump has imposed tariffs as high as 245% on Chinese imports — sending shockwaves across the global economies, plunging down the stock markets and raising concerns over the future of manufacturing and global trade.
While the tariffs have created ripples globally, the news might turn out to be positive for the Americans. Trump, in a recent interview, suggested that the reciprocal tariffs might raise enough funds to replace the federal income tax.
Trump cited historical examples from the late 1800s, when the tariffs were the government's primary source of income.
"There is a chance that the money is so great that it could replace (income tax)," Trump said in a Fox News interview.
"In the old days, about 1870 to 1913, the tariffs were the only form of money. And that’s when our nation was relatively the richest. We were the richest," he said.
Trump has also proposed to Congress to remove the taxes on tips and Social Security and said the tariffs could help fund the initiatives.
Any action on the income tax would have to be passed by Congress, which legislates on tax policy.
"We were making two billion and three billion dollars a day. We never made money like that," Trump said, adding that there will be a temporary reduction in rates to ease economic transitions.
Speaking on the claims that the tariffs caused the Great Depression, the President said, "The Great Depression came before they put the tariffs on."
The comments came as the Trump administration has imposed a 90-day pause on the new reciprocal tariffs, while raising duties on Chinese goods to as high as 245 per cent.
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