Shorouk Express
Remember, Trump wants to extend his 2017 Tax Cuts and Jobs Act, which is set to expire this year, and would have resulted in over 60 percent of filers likely seeing tax increases in 2026. He’s also floated other tax-cutting ideas, including exempting various types of income, such as social security pension benefits, tips and overtime pay.
Moreover, it is, indeed, true that in the 19th century, the U.S. federal government was largely funded by tariffs, custom duties and land sales. From 1861 to 1933, the U.S. had one of the world’s highest average tariff rates on manufactured imports, running at around 50 percent. That eventually started to drop from 1934 on, eventually leveling off at 5 percent when the U.S. started to champion regulated free trade and negotiated a slew of reciprocal trade agreements.
What could go wrong?
First, though tariff revenue was sufficient to fund a much smaller government with far fewer functions and a smaller military, it won’t be anywhere near enough to finance the current U.S. government — even a much reduced one. According to the Tax Foundation, the revenue generated by the newly imposed tariffs on goods from China, Mexico and Canada would only bring in the equivalent of around 2 percent of U.S. income tax.
Second, the U.S. will likely lose out. Overall, free trade has benefited the U.S. much more than it has hurt, especially when it comes to bilateral deals.
Admittedly, free trade deals are imperfect: Benefits are sometimes exaggerated, and not all of America’s industrial sectors and income groups prosper as a result. But according to an analysis by the U.S. International Trade Commission, free trade has boosted U.S. economic growth, incomes, exports and job creation.
Not that Trump sees it that way. He’s dismissive of the warnings piling up from economists, foreign leaders and the U.S. business community.
