Highlights:
President Donald Trump stated on Saturday (27) that his administration is considering substantial reductions to federal income taxes and may even attempt to eliminate them on the strength of rapidly expanding US tariff revenue. Speaking from Palm Beach, Florida, during a Thanksgiving video call with American military personnel, Trump asserted that tariffs have become a transformative source of national income, one he believes could underwrite sweeping tax changes.
Trump said the US is now collecting a 'massive' sum from tariffs, describing a reversal in which foreign companies must pay significant charges to access US markets while American producers and consumers face no equivalent outbound costs. According to the president, this shift allows the federal government to bring in unprecedented revenue, enough that eliminating income taxes is, in his view, within reach. “Over the next couple of years,” he said, “I think we’ll substantially be cutting and maybe cutting out completely… income tax.”
He argued that tariff receipts, which he characterized as reaching into the hundreds of billions annually, could fund a range of national priorities. Among the possibilities he listed were public 'dividends' similar to $2000 direct-payment checks, accelerated federal debt reduction, and incentives designed to attract foreign companies to build factories in the US to avoid tariff costs.
Trump cast these developments as proof that his trade-focused economic strategy is reshaping global investment into the American economy.
However, government figures show the scale of the challenge. In 2025, tariff revenue amounted to roughly $200 billion, while federal income taxes brought in around $2.4 trillion the previous year. This disparity raises questions about whether tariffs alone could realistically replace income-tax funding, even under expanded tariff programs.
Trump’s remarks come amid his renewed push to broaden U.S. tariff coverage following his reelection. His administration has been pursuing sweeping changes to U.S. trade policy, emphasizing high tariffs as both an economic and geopolitical tool. The Thanksgiving call provided a platform to link these policies to potential domestic tax relief, reinforcing the administration’s narrative that tariffs are not only reshaping global trade but also generating enough revenue to transform America’s tax structure.
Whether such plans are feasible remains unclear, but Trump’s comments signal that tariff expansion will remain central to his economic agenda in the years ahead.
