‘Why not?’: Donald Trump floats idea of eliminating America’s income taxes, replacing them with tariffs on Joe Rogan show — but experts warn it’s ‘mathematically impossible’

Tariffs: 10%, 20% or 2,000%?

On the campaign trail ahead of Tuesday’s Presidential election, Trump has floated plans for a broad-based tariff of 10% to 20% on all imports to the U.S., along with targeted tariffs upwards of 60% on all Chinese imports.

Trump has also pointed to specific industries as targets for even steeper tariffs.

In a recent farming roundtable in Smithton, Pennsylvania, he issued a stark warning to agricultural and construction equipment giant John Deere, threatening a 200% tariff on any products the company manufactures in Mexico.

“I love the company, but as you know, they announced a few days ago that they're going to move a lot of their manufacturing business to Mexico. I'm just notifying John Deere right now: if you do that, we’re putting a 200% tariff on everything that you want to sell into the United States,” he declared.

At the Economic Club of Chicago, Trump expanded on his plans, citing the auto industry as an area of concern. He expressed alarm over Chinese investment in auto plants in Mexico, warning that without action, these cars would flood the U.S. market, putting the American auto industry at risk. “That’s going to be the end of Michigan, it’s going to be the end of, frankly, South Carolina, going to be the end of everything,” he stated, suggesting that entire regions of the country could be devastated if these imports aren’t stopped.

To counter this, Trump proposed using heavy tariffs. “If I'm going to be president of this country, I'm going to put a 100, 200, 2,000% tariff,” he declared. “They're not going to sell one car into the United States, because we're not going to destroy our country.”

Trump outlined two key purposes for tariffs. The first is to generate government revenue, noting that even a 10% tariff could help reduce the budget deficit. The second is to force companies to relocate production to the U.S. However, Trump emphasized that a low tariff, like 10%, wouldn’t be enough to drive such a move.

“They're not going to do it for 10[%], but [if] you make a 50% tariff, they're going to come in,” he explained.

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‘Absurd idea’

Trump’s enthusiasm for tariffs, which he calls “the most beautiful word in the dictionary,” hasn’t found much support among economists, particularly when it comes to the idea of replacing income taxes with tariffs.

Erica York, a senior economist at the Tax Foundation, called the notion “absurd.”

“It’s an absurd idea for many reasons, the biggest being that it is mathematically impossible to replace the income tax with tariffs,” York told CNN.

York explained that tariffs apply only to imports — a much smaller tax base than taxable income — and therefore couldn’t generate the same level of revenue as income taxes.

Economists Kimberly Clausing and Maurice Obstfeld of the Peterson Institute for International Economics have further explored the numbers. They noted that in 2023, imported goods, which are subject to tariffs, amounted to $3.1 trillion, whereas taxable income in the U.S. exceeded $20 trillion — allowing the government to raise about $2 trillion in individual and corporate income tax revenue.

Clausing and Obstfeld argue that to replace income tax revenue, tariffs would need to be “implausibly high.” Moreover, raising tariffs to these extreme levels would likely reduce imports, shrinking the tax base even further. They conclude that “it is literally impossible for tariffs to fully replace income taxes.”

Additional research from the Budget Lab at Yale University highlights the potential impact on consumers. Their analysis found that Trump’s tariff proposal could increase prices by 1.4% to 5.1%, depending on the specific proposal. For an average household, that would mean a reduced purchasing power of $1,900 to $7,600 annually.