Experts skeptical after Trump says tariffs could replace income tax
Feb 27th 2026
In his Feb 24 State of the Union, President Trump said tariffs could substantially replace the modern income tax; policy experts say the idea faces legal, fiscal and economic barriers and would need congressional approval.
- Trump said in his State of the Union that tariffs could someday substantially replace the modern income tax.
- Only Congress can change the federal income tax code, so replacing income tax would require congressional legislation.
- Tariff revenue is limited because tariffs apply only to imports while a large share of the U.S. economy is services and domestic production.
- Economists warn tariffs raise consumer prices and tend to be regressive, hitting lower income households harder.
- Trade experts say steep tariffs risk foreign retaliation, reduced exports, and supply chain disruptions that can shrink overall tax revenue.
- Some proponents argue tariffs protect domestic industry and are simpler to collect, but most mainstream economists view tariffs as economically distortive.
- Replacing income tax would require major legal changes, detailed revenue modeling, and would likely produce economic and political fallout.