On April 7, U.S. Treasury Secretary Scott Bessent discussed President Donald Trump’s tariff plan in an interview with Tucker Carlson. Bessent highlighted three main reasons for implementing tariffs: generating revenue, protecting domestic industries, and negotiating concessions from foreign governments.
The revenue generated from tariffs is significant. Trump’s tariffs are expected to raise enough funds to cover the income tax paid by the bottom 75% of personal income tax filers in the U.S. However, revenue raising is not an official purpose of the tariff powers granted to the president by Congress, leading to some confusion about the legality of Trump’s tariff orders.
Trump’s tariff strategy includes two major categories under the International Emergency Economic Powers Act (IEEPA): tariffs aimed at addressing the fentanyl crisis from China and those intended to promote reciprocity in trade. The "IEEPA-Reciprocity" tariffs apply a universal 10% tariff on nearly all imports, excluding those from Canada and Mexico. This is expected to generate about $230 billion annually from the approximately $2.3 trillion in imports affected.
Additionally, a 20% tariff on goods from China and Hong Kong, introduced earlier this year, is projected to bring in another $87.8 billion. Tariffs on products from Canada and Mexico that do not meet specific trade rules could also add to revenue. Overall, estimates suggest that the total revenue from these tariffs could range from $250 billion to $300 billion in 2025.
Despite this potential for revenue, Bessent expressed concern that the administration may not be able to convince Congress to formally legislate these tariffs as part of the renewal of the 2017 Tax Cuts and Jobs Act. This lack of legislative backing raises questions about the long-term viability of the tariffs, especially given the numerous lawsuits challenging their validity.
In addition to revenue generation, the Trump administration is focused on creating an External Revenue Service (ERS) to manage tariff collections. The Customs Service, which previously handled this task, was reorganized in 2002 under the Department of Homeland Security. Critics argue that the current system lacks the necessary focus on revenue protection, leading to increased customs fraud.
The administration is also reviving a historical practice of imposing duties based on the tonnage of ships to support U.S. maritime interests. Beginning in October 2025, Chinese-built ships will face significant fees, while other foreign vessels will also incur charges, effectively penalizing foreign competitors.
On the protection front, Trump has utilized Section 232 of the Trade Expansion Act to impose tariffs on steel and aluminum, raising the aluminum tariff from 10% to 25% shortly after taking office. The administration is also investigating additional industries, including pharmaceuticals and semiconductors, to determine if further tariffs are needed to protect national security.
Lastly, Bessent described tariffs as a tool for negotiating with foreign governments. However, this approach has drawn criticism for its unpredictability, making it difficult for businesses to plan for the future. Critics argue that these negotiating tariffs could undermine the stability needed for effective economic planning.
As the Trump administration approaches the end of its first 100 days, the impact of these tariffs remains a topic of debate. While they may provide short-term revenue and protection, the long-term consequences and legal challenges could shape the future of U.S. trade policy significantly.
