President Trump has long sold his tariff plan as a new source of cash for the government. And with his recent moves, tariffs are adding tens of billions of new dollars to federal revenue.
Last month, the Department of the Treasury brought in more than $29 billion in "customs and excise taxes" — a category that is overwhelmingly tariff revenue.
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This pace means that in just a few months, the government will be able to rake in what it received in all of last year. In 2024, customs and excise revenue totaled $98 billion.
Importantly, that tariff money is coming from Americans. Businesses in America are directly paying the tariffs to the government. When they raise prices, it comes indirectly out of consumers' pockets.
While $29 billion is a massive spike compared to prior years, it pales in comparison to the main way the government gets money — income taxes.
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Trump has said multiple times that tariffs could replace income taxes. Tariffs certainly couldn't replace them entirely, and tariff revenue would have to grow a lot more to replace even a sizable part of that revenue.
So far in fiscal year 2025, tariffs have accounted for 2.7% of federal revenues — a jump over past years that will almost certainly climb higher if tariffs remain in place.
"Historically, tariff revenue has never accounted for more than about 2% of total federal government revenues in the modern era," said Shai Akabas, vice president of economic policy at the Bipartisan Policy Center. "And with the tariffs that are in place today, that could go up to 5% or perhaps even higher."
Should tariff revenue eventually climb to that 5% level — that's significant, but it's not big enough to fulfill some of Trump's more outlandish promises. For example, he has recently said he wants to use tariffs to reduce the national debt.
"We have a lot of things we can do. One of the questions asked of me this morning is: are you going to make a dividend to the people?" Trump told reporters last week. "And the purpose of what I'm doing is primarily to pay down debt, which will happen in very large quantity."
Tariff revenue is a tiny fraction of the national debt
Tariff revenue right now is a tiny fraction of that debt, which stands near $37 trillion. While any revenue can help the government fiscally, tariff revenue will barely make a dent in that total.
While the new tariff revenue is considerable, there's a good chance it won't cover new debt that this administration just added in the megabill passed by Republicans and signed into law last month.
That law will cost $3.4 trillion over the next decade, according to the Congressional Budget Office. Tariffs, meanwhile, are estimated to bring in $2 trillion to $3 trillion in the coming decade, according to a few different independent estimates.
There are more tariffs to come — but limits on how much tariff revenue can grow
It is true, of course, that Trump is continually adding new tariffs. Currently, his administration is investigating the possibility of tariffing a range of goods, including semiconductors, pharmaceuticals and commercial airplanes. That means projections of tariff revenue could still change a lot.
However, there are limits to how much that revenue could grow, said Jessica Riedl at the right-leaning Manhattan Institute. She points out that tariffs are already dragging on the economy, which diminishes the bigger pot of revenue that the government needs to run.
So while there's more tariff revenue now, she told NPR, "that must be offset against the lower revenue we're bringing in in income, payroll and corporate taxes as a result of the economy growing at only half the rate it was forecast before the year started."
Furthermore, Trump's other tariff aims could work against his revenue hopes, Riedl said. Trump has repeatedly said he wants tariffs to boost U.S. manufacturing by incentivizing companies to build domestically. But the more things are made here, the fewer imports — reducing tariff revenue.
Consider as an example Apple, which has said it plans to build more of its products in the United States. If Apple were to find ways to source and assemble all of its iPhones domestically, those iPhones would generate zero tariff revenue.
And tariff revenue projections hinge on a looming court decision.
A federal court said in May that Trump did not have the authority to impose his country-by-country tariffs, which would include those that went into effect last week on places like India and Japan. The Trump White House appealed, and those tariffs are still in place pending a decision.
If the court were to eventually rule against Trump, that would end many of his tariffs and also might require revenue to be refunded — a huge logistical headache that also would undercut Trump's economic strategy.
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