Tariffs to Be Biggest Tax Increase Ever on Working Class
By Reuters | 26 Aug, 2025

Tariff collection will generate between $500 billion and $1 trillion per year in revenues, according to today's estimate by Treasury Secretary Scott Bessent, making Trump tariffs by far the biggest tax increase ever on the working class.

U.S. Treasury Secretary Scott Bessent said on Tuesday that customs duty revenues from President Donald Trump's tariffs may top $500 billion a year, with a substantial jump from July to August and likely a bigger jump in September.

Bessent told a White House Cabinet meeting that his prior estimate of a $300 billion annual tariff collection rate was too low.

"We had a substantial jump from July to August, and I think we're going to see a bigger jump from August to September," Bessent said. "So I think we could be on our way well over half a trillion, maybe towards a trillion-dollar number. This administration, your administration, has made a meaningful dent in the budget deficit."

Most economists agree that the tariffs will be borne primarily by American consumers rather than by foreign companies or governments as Trump and Bessent have asserted.  Due to the fact that tariffs imposed on imports would burden consumers in a regressive manner in contrast to the progressive income tax code under which lower income taxpayers essentially pay no or very little taxes while upper-income taxpayers pay a marginal rate of 37% on their top dollars.  Consequently, if Bessent's estimate is accurate the Trump tariffs are the single biggest tax hike ever on working class families for whom the price increases would take the biggest proportionate share of their incomes.

Tariff revenue would offset the deficit increases triggered by the Republicans' tax-cut and spending bill passed this year. CBO estimated this bill would widen the deficit by $3.4 trillion over the next decade.

Trump's tariffs drove July U.S. customs duty collections up by nearly $21 billion from the $7 billion collected in July 2024 and about even with the $20 billion increase registered in June. Significant increases in tariff rates for nearly all trading partners kicked in on August 7.

The U.S. Treasury reported on Monday that as of August 22, the government had collected $29.6 billion in combined customs and excise taxes so far during August, matching its total for the whole month of July. As of July 22, that combined figure stood at $7.8 billion, but customs duty collections can vary from day to day.

Bessent also noted that the Congressional Budget Office's upwardly revised estimate last week of federal revenue from Trump's tariffs, forecasting that it could reduce federal deficits by $4 trillion over 10 years. "And I would expect that that number could go up from here," Bessent added.

The latest CBO estimate marks an increase from June when it forecast that revenue from new tariffs would reduce deficits by $3 trillion over 10 years.

(Reporting by David Lawder; Editing by Mark Porter and David Gregorio; additional reporting by Goldsea Staff)