Desk Report,
How much revenue does the United States receive from tariffs, and what happens to that money?
There is not a day that President Donald Trump doesn’t boast that the US government is collecting record amounts of revenue since he raised tariffs on almost all types of imported goods.
How much revenue does the United States receive from tariffs, and what happens to that money?
A lot of money is coming in – never before in the history of the country, Trump said this in reference to tariff revenue on Friday.
According to CNN, Trump is not wrong. According to the US Treasury Department, the US government collected about $ 30 billion or 30 billion in tariff revenue in July last year; which is 242 percent more than in July last year. In April, Trump imposed a 10 percent tariff on almost all types of goods. In addition, some higher tariffs took effect in the following months. The reality is that from then to July, the government has collected a total of $ 100 billion or 100 billion in tariff revenue – three times more than in the same period last year. The question is – where is the government spending this huge amount of money?
Trump mentioned two possibilities. First, pay off the government’s trillions of dollars in debt and give Americans “tariff rebate checks” (tax revenue delivered directly to the people).
Trump said on Tuesday that the main purpose of what he is doing is to pay off the debt; it will be quite large in terms of numbers. But he thinks that so much money is coming in that people might be able to get a dividend.
But so far neither has happened. Many Americans may feel that the billions of dollars in tariff revenue that are mainly coming out of the pockets of American businesses to deal with the first blow of foreign imports may be just collecting dust.
All the revenue that the government collects—whether from general taxes or tariffs—is deposited into the General Fund, which is controlled by the U.S. Treasury Department. They call this fund “America’s checkbook” because it is where the government’s expenses are paid, such as tax refunds.
When the amount of revenue is less than the government’s spending, that is, a budget deficit occurs, the government borrows to cover the deficit. The total amount of debt on the current government is more than 36 trillion or 36 lakh crore dollars. This debt is constantly increasing. Many economists warn that this debt burden is slowing down the pace of economic growth.
Just as an ordinary American pays interest on a loan, the government also has to pay interest on the loan. The more debt, the more interest. As a result, there is a strain on money, whether it is for highway development or for spending on human welfare.
This tax revenue is not enough to cover the US government’s budget deficit of 1.03 trillion or 1 lakh 30 thousand crore dollars in the current fiscal year. However, it is also true that the deficit figure has decreased somewhat due to the money received from taxes. In other words, the government now does not have to borrow as much as it would have had to borrow without tax revenue.
Brett Ryan, senior US economist at Deutsche Bank, said that there is an opportunity for better use of this money, but this is not the case. According to Ernie Tedeschi, director of the Budget Lab at Yale and a former economist in Biden’s White House, if Congress follows Trump’s proposal and returns tax revenue to the public in the form of “rebate checks,” the deficit will increase even more.
Republican Senator Josh Hawley introduced a bill on the issue last week. He said that this is not the policy to follow now, but rather risks increasing inflation. The White House did not respond to CNN’s questions on this subject. While on paper, the government’s financial situation has improved due to the benefit of tax revenue, its impact is not always good. Most businesses are still covering the additional costs themselves, not raising prices. This does not apply to all businesses. The increase in tariffs has led to an increase in the price of household appliances, toys, and consumer electronics. The US government’s recent report on inflation has shown this. Many companies, such as Walmart and Procter & Gamble, have warned of further price increases.
Many companies have put off hiring due to uncertainty over tariffs. Several economic surveys indicate that job opportunities are shrinking.
Analysts believe that the tariffs will have a negative impact on the US economy. According to the Yale Budget Lab, the impact of Trump’s tariffs will reduce US gross domestic product (GDP) growth by half a percentage point this year and next.
This will result in a loss of some tax revenue; because if growth is slower than expected, then even if there is tax revenue, there will be less money from income and payroll taxes.
Trump and his administration see it differently. They argue that the tariff revenue, combined with the huge tax cuts and spending bill that have just been implemented, will make the US economy stronger. Over time, it will.
