Michael Vadon, CC BY-SA 4.0
By Brett Rowland | The Center Square
(Worthy News) – President Donald Trump told world and business leaders Thursday to make products in America or prepare to pay tariffs.
Trump’s remarks came the same day as a new analysis suggest his tariff plans could generate $1.5 trillion over the next decade. Tariffs are a tax paid on imports or exports.
Trump plans to impose a 10% tariff on all imports from China and a 25% tariff on imports from Mexico and Canada starting Feb. 1.
Trump spoke about his tariff plans Thursday by satellite to the 2025 meeting of the World Economic Forum in Davos, Switzerland. He said that businesses that don’t make products in America will pay some kind of tariff.
“My message to every business in the world is very simple: Come make your product in America and we will give you among the lowest taxes of any nation on Earth,” Trump said. “But if you don’t make your product in America, which is your prerogative, then very simply, you will have to pay a tariff of differing amounts, but a tariff which will direct hundreds of billions of dollars – even trillions of dollars – into our Treasury to strengthen our economy and pay down debt.”
In an analysis, the Committee for a Responsible Budget assumed those would be minimum tariffs on goods currently facing less in tariffs. It estimated Trump’s tariff policies would boost revenue by about $140 billion over the rest of calendar year. If made permanent, CFRB estimated they would raise $1.5 trillion through fiscal year 2035 on a conventional basis – and accounting for economic effects, $1.3 trillion through 2035.
The group made its uncertainty about those estimates clear, noting that many outside factors could change projections.
“Importantly, our estimates including dynamic and retaliatory effects on revenues are very rough and meant to convey the magnitude of their effects rather than precise scores,” the group noted in the analysis. “Based on available data from the Congressional Budget Office, we assume these tariffs would reduce U.S. output by about 0.3% once phased in. There is great uncertainty regarding the actual effects.”
Trump has made big promises about his tariff plans. During his inauguration Monday, Trump said tariffs would make the U.S. “rich as hell.”
John Paulson, founder of Paulson & Co. and a Trump campaign adviser, previously said Trump’s tariffs could generate $450 billion in revenue a year.
How much money tariffs would ultimately bring in depends on multiple factors, including how other nations respond. That makes it “highly uncertain,” according to credit-rating agency Moody’s.
“While such measures could raise several trillion dollars in revenue over the next decade, they could also lead to revenue losses from potential retaliatory actions from other countries and other economic losses,” Moody’s noted in a recent report. “Therefore, the net effect on future revenues and fiscal deficits from such measures is highly uncertain.”
Trump previously said he couldn’t guarantee that his tariff plans would not raise U.S. consumers’ prices.
Tariffs could raise prices for U.S. consumers and slow economic growth. S&P Global, a credit-rating agency, reported that Trump’s proposed tariffs could boost inflation by 1.8% and lower U.S. economic output by 1%, according to a post-election report.
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