Trumps Plan With Tariffs: Big Hat, No Cattle

In the early months of his presidency, Donald Trump rolled out one of his signature economic policies: broad tariffs on goods imported from America’s trading partners. Branded as a strike back against other countries’ trade practices — the idea being to protect U.S. industry — these tariffs will ultimately raise the prices Americans pay for imported goods.

Big Hat, No Cattle: someone who talks a big game but lacks the substance, skill, or action to back it up. 

The effects of the policy have not yet been fully felt. Partly that’s because of the staggered rollout; but also because of the massive wave of advance purchasing by U.S. corporations when the policies were first announced. That stockpiling has allowed companies to keep prices relatively flat for now — or allow them to creep upward slowly — setting the stage for what will soon become a new normal. Those obscuring factors have so far prevented a robust national discussion about the true costs and benefits of the policy.

While Trump continues to deny that tariffs will cost American consumers anything, it is mathematically impossible for corporations to absorb those costs indefinitely — unless you’re betting on them suddenly prioritizing the common good over the bottom line.

Tariffs Are a Regressive Tax

For anyone paying attention, tariffs are a regressive tax, meaning that people at the lower end of the income spectrum end up paying a higher share relative to their income than wealthier Americans do.

Let’s take Alice. She earns $50,000 per year after taxes. She spends 30% of aftertax income on products from Amazon, Walmart, and Target that have all been imported from overseas. If tariffs increase prices by 10%, the effect will be that Alice will spend $16,500 next year for the same products, with that $1,500 going to the Federal Government, or 3% of her overall after tax earnings.

Now consider Bob. He earns $1,000,000 a year after taxes. Like many high-income earners, he is a net saver. Suppose he puts $400,000 aside into savings and investments first. Of the remaining $600,000, he spends 30% — $180,000 — on imported products. After a 10% tariff hike, his costs go up to $198,000. That’s an $18,000 increase — but on a $1,000,000 income, that’s only a 1.8% hit.

This illustrates why tariffs have a heavier burden on lower- and middle-income Americans: the extra costs take a larger share of their income than they do for the wealthy.

Financial Shell Games

Trump keeps talking about tariffs being a game changer for the U.S. middle class and makes wilder and wilder projections about how effective they will be. Because of all the “new money” flowing in from tariffs, he is floating the idea of sending “dividend checks” to the public, telling his supporters of his plans to pay down the national debt, and how he hopes to eliminate Federal Income Tax entirely.

To throw ice cold water on things:

• Tax Policy Center estimates that in 2026, reciprocal tariffs will bring in $256 billion in new revenue, costing the average “tax unit” $2,200, with tax unit meaning a tax filing unit – either an individual or a married couple.
• The Congressional Budget Office estimates that our budget deficit in 2026 will be staggering $1.7 trillion dollars.
• The Tax Foundation estimates that the cost of issuing $2000 “dividend checks” to taxpayers, an idea that Trump and his Cabinet have floated several times, would cost anywhere from $279 billion to $606 billion.
• The United States Treasury reported that we had nearly $37 trillion debt outstanding as on September 30, 2025.

In other words:

• Tariffs won’t come close to balancing the budget, let alone paying down the national debt.
• The one-time “dividend” checks that his supporters are thrilled about will cost more the us more than tariffs will have brought in, meaning that we’ll need to borrow more money just to send checks to ourselves with Trump squiggly signature on it.
• If by some miracle, we eliminated the budget deficit AND elimitated interest on our debt, it would take 144 years to pay down our national debt using the amount of money Congress expects tariffs to bring in.

Given off that, it’s impossible to call anything that Trump has told the public regarding tariffs as being anything other than a delusional old man’s pipe dream.

Conflicting Promises

Let’s take take that Donald Trump has said about tariffs at face value:

• He says tariffs will bring manufacturing jobs back to the U.S. — decreasing reliance on imports.
• He also says tariffs will raise so much revenue that income taxes can be eliminated.

Do you see the problem?

These two promises are fundamentally incompatible. If imports decline (because manufacturing returns, or because consumers substitute toward domestic goods), tariff revenue falls. Without tariff revenue — and with income taxes gone — the government would be left with no reliable source of revenue. That would mean drastic cuts to government services, or ever larger deficits.

Some wealthy libertarians and anti-tax advocates may salivate at the idea. But in real life, this plan spells either a massive blow to public services — or a return to large-scale borrowing just to sustain basic government functions.

In Closing

The tariffs being sold by Trump aren’t a progressive path forward — they’re a regressive tax in disguise. They will disproportionately burden lower- and middle-income households, while delivering only modest benefit. The trade-offs — higher prices, lower wages, potential job losses, and slower growth — make the idea of replacing income tax with tariffs not only impractical, but irresponsible.

Until there is a credible plan showing how to replace income taxes without strangling the poor or exploding the deficit, any talk of using tariffs to eliminate income taxes deserves to be called what it is: a radical — and deeply flawed — pipe dream cooked up by a snake oil salesman.