Could Tariffs Raise $700 Billion a Year? Not Without Pain
Only a few countries have tariffs as high as the Trump administration is proposing — and they are all much poorer than the US.
Waiting for tariffs.
Photographer: Jeff Kowalsky/AFP
There’s a lot of uncertainty over whether President Donald Trump will actually go through with all his planned tariffs, whether the economy will stall or go into reverse as a result, and whether Congress will eventually decide that it has had enough of ceding its tariff authority to the president. I thought it might be helpful to put those concerns aside for a moment, take White House trade adviser Peter Navarro at his word that Trump’s tariffs will raise $700 billion a year ($100 billion from auto tariffs, $600 billion from everything else) and examine what that kind of tariff revenue looks like in the great sweep of American economic history.
First of all, it looks like a lot. $700 billion is about nine times current US customs revenue, and 2.4% of the most recent estimate of US gross domestic product. Tariff revenue hasn’t surpassed 2% of GDP since the early 1870s, and hasn’t surpassed it on a sustained basis since the 1820s and 1830s. Trump often cites President William McKinley’s high tariffs as an inspiration, but during McKinley’s presidency (1897 to 1901) tariffs generated less than half the share of GDP that $700 billion would amount to now.