In his State of the Union address delivered on February 24, 2026, the U.S. President was crystal clear: “As time goes by, I believe the tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love.” This idea is not new. Trump has been repeating it since November 2025, claiming that tariff revenues could allow for massive cuts to the income tax in the coming years — or even its near-complete elimination — and potentially for incomes below certain thresholds (around $150,000 to $200,000, according to his earlier comments). A Return to Historical Roots? For Trump, this project has a historical dimension. Before the introduction of the federal income tax in 1913 (via the 16th Amendment), the United States largely funded its federal spending through customs duties. The President sees current tariffs as a way to return to that model while protecting American industry and making “foreign countries” pay. Since taking office, his administration has dramatically increased tariffs: a baseline 10% tariff on nearly all imports (sometimes referred to as “Liberation Day”), much higher rates on China (up to 60% or more), as well as elevated duties on steel, aluminum, automobiles, and other sectors. These moves have triggered trade wars with numerous countries. The Economic Reality: A Massive Gap While the message resonates strongly with his electoral base, most economists remain highly skeptical.

The federal income tax accounts for roughly 50% of U.S. government revenues — more than $2.4 trillion annually. Even after the sharp increases in 2025, tariff revenues remain far more modest: estimates for 2025–2026 range from about $190 billion to $260–$280 billion per year, according to the Tax Foundation and other analysts. Even with very high tariff rates (20% or more across the board), projections show it would be impossible to fully replace income tax revenue without exploding the federal deficit or making deep spending cuts.

Moreover, experts point out that tariffs are not primarily “paid by foreign countries.” The cost is mostly borne by American importers, businesses, and consumers through higher prices — equivalent to a hidden tax increase of roughly $700 to $1,300 per household depending on the year and scope of tariffs. A Risky Bet for the Economy? Beyond revenue, the tariffs are already having tangible effects: they raise the cost of living and can slow growth by disrupting supply chains. Analysts note that replacing a progressive tax (which taxes higher incomes more heavily) with tariffs would amount to shifting toward a more regressive system that disproportionately affects middle- and lower-income households through increased prices. So far, no concrete legislative proposal has been introduced in Congress to abolish the income tax. Trump has suggested he might be able to advance parts of this agenda through executive powers, but major changes would likely require congressional approval. Conclusion: Populist Promise or Fiscal Revolution? Donald Trump has clearly declared war on the modern federal income tax, framing it as an unnecessary burden that tariffs could eliminate. His rhetoric appeals to those who see tariffs as a tool for both protectionism and tax relief. However, the gap between the political message and budgetary reality remains enormous. Whether this ambitious promise will survive until the 2026 midterms — or remain, as many economists argue, a powerful political slogan rather than a feasible policy — is still an open question.