WASHINGTON — President Trump boasts his massive tariffs will bring manufacturing back to the United States and rebalance an unfair global trading system. But for Republicans, they have another purpose: generating billions of dollars in government revenue to provide fiscal cover for the extension of his 2017 tax cuts.
“We have six or seven trillion dollars coming into our country,” Trump said to reporters Thursday, echoing a recent estimate from a top administration official of how much money the tariffs would produce over the next 10 years.
Extending the tax cuts, which expire on Dec. 31, will cost approximately $4.5 trillion over the next decade. That total could go even higher if Congress adds provisions, such as Trump’s campaign promises to eliminate taxes on tips, overtime pay, and Social Security benefits. So Trump and his Republican allies in Congress need to find a pool of incoming funds to offset that price tag and avoid exploding the already soaring national debt.
That’s where the new tariffs come in.
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“It will all be made up with tariffs,” Trump posted on Truth Social in early January about how he would pay to renew and expand his 2017 tax cuts.
“It’s the only other way, unless we raise taxes on the American people,” Senator Tommy Tuberville, an Alabama Republican, told the Globe Thursday. “And we can’t do that.”
But Democrats said there are major flaws in the plan. First, tariffs aren’t money coming into the Treasury from outside the country. They are fees levied on foreign products that are paid by US importers. Foreign exporters sometimes eat the additional fee or part of it, but US companies typically are stuck with the extra cost and pass it on to consumers.
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Democrats said that makes tariffs just a different type of tax on Americans. And economists warn the tariffs could push the United States into a recession, negating those lofty estimates of new federal revenue as consumers and businesses curtail their purchases.
“They’re hoping they can sell a story to the American people based on magic math,” Senator Elizabeth Warren, a Massachusetts Democrat, said of Trump and the Republicans. “Trump’s tariffs are designed to create an illusion of incoming revenues for the government.”
Said Maryland Democratic Senator Angela Alsobrooks, “It is, quite literally, to help us afford tax cuts for billionaires.”
Trump has repeatedly asserted tariffs can be a major revenue-raiser for the federal government, even musing (unrealistically experts say) that they could one day replace income taxes.
“For years, hard working American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense,” Trump said Wednesday in announcing the tariffs, which a private analysis said raises the overall US tariff rate to 22 percent from 2.5 percent last year. “But now it’s our turn to prosper, and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt, and it will all happen very quickly.”
Peter Navarro, Trump’s top trade adviser, has estimated that the tariffs would raise about $600 billion to $700 billion a year.
“The message is that tariffs are tax cuts, tariffs are jobs, tariffs are national security, tariffs are great for America,” Navarro told Fox News on Sunday.
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The White House on Thursday also made the connection between tariffs and tax cuts.
“STUDY: Even a modest 10% universal tariff would lead to $728 billion in economic growth and 2.8 million new jobs — and generate $263 billion in new revenue to pay for tax cuts,” the official White House rapid response account posted on X, linking to a study by the Coalition for a Prosperous America, which supports tariffs.
In 2024, the United States collected $77 billion in tariffs, which was about 1.6 percent of all federal revenue, according to the Congressional Research Service.
Some Senate Republicans said they were hesitant to count on tariffs as a money-raiser.
“There’s no question that the tariff revenue could be very significant,” said Senator Jim Justice of West Virginia. “But to me, the whole gist of the tariff move is to change the way others perceive us and the way we’re conducting business with the whole world.”
Senator Mike Rounds of South Dakota said he is worried about retaliatory tariffs by other countries that could make it harder for US farmers to sell their products abroad and cause the domestic economy to take a hit. China has already hit back against Trump tariffs put in place earlier this year with an additional 15 percent levy on some US agricultural products, such as soybeans, in a repeat of retaliatory tariffs that hit farmers hard during Trump’s first term.
“We don’t know how that will slow down, in terms of retaliation, our ability to market our products overseas, which produces income in the United States,” he said. “So I don’t know what that net offset is.”
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Senator Chuck Grassley, an Iowa Republican, demonstrated the concern in farm country by introducing legislation Thursday with Senator Maria Cantwell, a Washington Democrat, that would require congressional approval of tariffs put in place by Trump and future presidents.
The Trump administration’s tariff revenue estimates also don’t take into account the likelihood US consumers will change their buying habits to avoid paying higher costs for imports, said Mark Zandi, chief economist at economics and research consulting firm Moody’s Analytics.
“If you raise prices, obviously demand is going to fall. You’re going to see less imports, so your tax base is going to erode,” he said.
On top of that, Trump’s sweeping tariffs have greatly increased the chances the US economy falls into a recession this year, Zandi said, which would result in lower tax collections while increasing what the government would likely spend on food stamps and other assistance.
“When you add it all up, I’m not sure how much revenue you’re actually raising,” he said. “This idea that, ‘I’m going to raise revenue to pay for tax cuts,’ I think, is a specious argument. It doesn’t work.”
Globe correspondent Asia Alexander contributed to this report.
Jim Puzzanghera can be reached at jim.puzzanghera@globe.com. Follow him @JimPuzzanghera.