Prominent liberal economists, from Robert Reich to New York Times columnist Paul Krugman, have been vehemently critical of presumptive 2024 GOP presidential nominee Donald Trump's tariff proposals. Trump is claiming that tariffs could be used to eliminate the United States' federal income tax, and Reich and Krugman are among the many economists who have been warning that if his proposals were implemented, they would, in effect, amount to a massive tax hike for low-income Americans.
But not all of the criticism is coming from the left.
In a biting article published by The Dispatch on June 19, libertarian Scott Lincicome — who serves as vice president of general economics and trade for the Cato Institute — lays out some major flaws of Trump's tariff proposals.
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"Even setting aside the many economic problems that tariffs create," Lincicome explains, "trying to use them to fund the U.S. government is not only mathematically implausible even with radical spending cuts, it also raises all sorts of practical problems and economic uncertainties…. The first big problem is basic math."
The libertarian continues, "The United States imported around $3.8 trillion total last year — $3.1 trillion in goods, $714 billion in services — but the federal government spent $6.1 trillion while raising just $4.4 trillion…. So, in a situation where nothing changed in response to higher tariffs…. the federal government would need to impose a tariff on all imports of goods and services of around 160 percent to cover current spending and 116 percent to replace just revenues."
Lincicome points out that "total income tax revenue" for the United States in 2023 "was almost $2.2 trillion," which means that a "58 percent global tariff" would be needed "to cover that amount."
"Apply tariffs to just goods, and you shrink the tax base — meaning you'd need even higher tariff rates to cover whatever revenues you’re trying to replace," Lincicome argues. "Nix only income taxes for the bottom 50 percent of American taxpayers, and you can apply much lower tariff rates — maybe just a few percentage points."
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Scott Lincicome's full article for The Dispatch is available at this link (subscription required).
