A study released by personnel at the Peterson Institute for International Economics (PIIE) on Tuesday (the 22nd) showed that if President Trump's tariff plans are implemented, it could generate several trillion dollars in revenue, but the net benefit to the government's finances would be far lower than what Trump and his advisors estimated.
According to the study, a comprehensive 10% tariff on imported goods would generate an additional $2.9 trillion in revenue for the federal government over 10 years, but would lead to slower economic growth and, with other countries potentially retaliating, the net tax revenue would decrease to $1.6 trillion. According to Treasury Department data, total revenue for fiscal year 2024 is approximately $4.9 trillion.
The PIIE's research shows that the White House overestimated tariff revenues. Trump trade advisor Peter Navarro recently stated that tariff revenues over the next decade might increase by $6 to $7 trillion, helping to cover the costs of tax cuts and deficit reduction.
The PIIE model found that government net income may decline with higher tariffs, which is counterintuitive. Warwick McKibbin, a distinguished researcher at the PIIE, and Geoffrey Shuetrim, Chief Technology Officer of McKibbin Software Group, are the authors of the study. Considering retaliation from other countries, implementing a 15% comprehensive tariff could bring about $1.5 trillion in revenue, while increasing it to 20% would yield less than $800 billion.
White House spokesperson Desai said in an email: "The Trump administration only cares about the maximum interests of Americans, not the opinions of globalist 'free' trade think tanks."
Trump's tariffs have caused a stir globally and he is currently negotiating with multiple countries. White House press secretary Letvit cited Trump's remarks: "We are making very good progress on a potential trade agreement with China. There are now 18 proposals, and more than 100 countries worldwide hope to reach agreements with the United States."
So far, Trump's tariffs have only encountered mild resistance from Republicans. Some Republican lawmakers have initiated legislation to limit Trump's trade powers, and the White House has threatened to veto it. Many Republican lawmakers said they believe these tariffs are just Trump's negotiation strategies to secure favorable trade deals for the U.S.
PIIE and similar studies indicate that if lawmakers' judgment is incorrect, the U.S. will incur quite high long-term costs. In all scenarios analyzed by researchers, domestic production, investment, employment, and real wages in the U.S. will decline over the next 10 years, while inflation will rise over the next two years. The industries hardest hit are agriculture, manufacturing, and mining, as they rely heavily on foreign demand.
Original source: https://www.toutiao.com/article/7496342619866546703/
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