Republican presidential candidate, former U.S. President Donald Trump gives remarks to the press at the National Republican Senatorial Committee building on June 13, 2024 in Washington, DC. Trump is visiting Capitol Hill to meet with House and Senate Republicans.Former President Donald Trump's recent proposal to replace the U.S. income tax with a tariff on all imported goods is a twist on a clarion call from conservatives – and it could come with unintended consequences.
Trump's proposal brings a new wrinkle to the movement, as it would replace the income tax with a levy on all imported goods.Simple math would suggest that the government may need to impose a 65% tax on all imported goods and services to raise the needed $2.5 trillion. We've had experiences with large-scale tariff impositions amid the Great Depression. Indeed, in 1930, President Herbert Hoover signed the Smoot-Hawley Tariff Act,
Having said that, scrapping the income tax and replacing it with massive tariffs is both inflationary and recessionary as it would raise prices, dampen consumption and strip the U.S. of its ability to source goods and services from friendly partners, as well as adversarial nations.