Trump suggests dropping income tax as tariff receipts climb

U.S. President Donald J. Trump announced that his administration is considering slashing and potentially eliminating the federal income tax for the next few years, arguing that soaring tariff revenue could replace the lost revenue.

The proposal comes amid a dramatic surge in customs duty collections since Trump enacted a sweeping new tariff regime earlier in 2025. In October alone, customs duties reportedly reached around $31–$34 billion, part of a trend of record‑high monthly tariff revenues

Trump told some U.S. military service members, “Over the next couple of years, I think we’ll substantially be cutting and maybe cutting out completely, but we’ll be cutting income tax. It could be almost completely cutting it because the money we’re taking in is going to be so large.”

He did not, however, provide an outline of how he aims to phase out most income tax.

President Trump pushes to replace income tax with tariffs

On multiple occasions, the president has claimed that tariffs will pave the way for sizable cuts to Americans’ income taxes. In April, Trump, on his Truth Social platform, commented, “When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated. Focus will be on people making less than $200,000 a year.” 

These remarks are consistent with his 2024 claims, in which he floated the notion of scrapping the federal income tax and relying mainly on tariffs, as was done in the 1800s. Reports in October indicated that Trump told Bronx barbers there could be a way forward if his proposal materialized, explaining that the 1890s system was funded solely by tariffs.

In a Joe Rogan podcast, Trump said he had truly aimed to substitute federal income taxes with tariffs, giving a casual, “Yeah, sure, why not?”

So far, Trump has imposed tariffs ranging from 10% to 50% on most U.S. imports, with the exact rate varying by country. He said the tariffs would bring in more money for the government and steer shoppers toward American goods, adding that other countries have long taken advantage of the U.S. His goal, he said, is to shrink the trade deficit — the gap between what America imports and what it exports. However, the American President has used the taxes to make other demands. He specifically cited China, Mexico, and Canada, insisting they improve controls over migration and fentanyl reaching U.S. soil. 

Trump’s tariffs have faced multiple legal challenges

Trump’s tariff policies have faced repeated legal scrutiny regarding the manner in which they were enacted. The Trump administration had bypassed Congress by invoking the 1977 International Emergency Economic Powers Act, allowing immediate action. In August, a U.S. appeals court ruled that most of the tariffs were illegal, yet left them in effect.

The White House appealed to the Supreme Court to reverse the decision, but a ruling could take months. Negotiations are ongoing with multiple nations, including China, Canada, and Mexico, which have been informed that they could face particularly steep tariffs.

Though quite recently, the U.S. president suggested a tariff dividend plan, pledging at least $2,000 per individual, excluding high-income Americans, and addressing detractors of the tariffs.

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