The United States is experiencing a significant shift in federal revenue due to the aggressive tariff policies implemented during President Donald Trump’s second term, with collections already reaching unprecedented levels in 2025. By July, tariffs had generated approximately $108 billion over nine months, a sharp increase from historical norms, driven by new trade measures targeting major partners like China, Canada, and Mexico. This article explores the current state of tariff revenue, projections for 2026–2028, and the broader economic implications of these policies.
Tariff revenue surges in 2025
In the first seven months of 2025, US tariff revenue reached $108 billion, with June alone recording $29 billion in customs and excise taxes, predominantly from tariffs. This marks a significant departure from the historical average, where tariffs accounted for just 2% of federal revenue. By mid-2025, tariffs contributed around 5% of total federal revenue, reflecting the impact of policies such as a 10% tariff on Chinese imports effective from February and planned increases on Canadian and Mexican goods. The administration anticipates sustained monthly collections of approximately $50 billion, potentially pushing annual revenue for 2025 to between $300 billion and $600 billion, depending on trade negotiations and exemptions.
Long-term revenue projections
Independent analyses, including those from The Budget Lab at Yale, estimate that if current tariff policies persist, they could generate $2.7 trillion over the decade from 2026 to 2035 on a conventional basis. However, when factoring in dynamic effects—such as reduced economic growth due to higher prices and trade disruptions—this figure drops to $2.3 trillion. These projections assume no major policy reversals or legal challenges, such as the ongoing appeal against a May 2025 court ruling deeming some tariffs illegal. The estimates suggest an average annual revenue of $230 billion to $270 billion, highlighting tariffs’ growing role in federal finances.
Three-year outlook for 2026–2028
While specific three-year forecasts are limited, extrapolating from decade-long projections provides a clearer picture. Assuming the $2.7 trillion conventional estimate is spread evenly, tariff revenue could total approximately $810 billion over 2026–2028, or about $270 billion annually. A more conservative estimate, accounting for dynamic economic effects, suggests $690 billion over the three years, averaging $230 billion per year. These figures depend on the stability of current policies and the absence of significant retaliatory measures from trading partners, which could further reduce economic output and revenue.
Economic and fiscal implications
The surge in tariff revenue offers a potential buffer against the projected $1.9 trillion federal budget deficit for 2025, as noted by the Congressional Budget Office. However, the economic trade-offs are significant. The Budget Lab at Yale reports that 2025 tariffs could reduce US GDP growth by 0.5 percentage points annually in 2025 and 2026, with long-term economic output potentially 0.4% lower. Higher consumer prices, particularly for goods like clothing and automobiles, may disproportionately affect lower-income households, with estimated per-household income losses of $2,000 to $2,400 in 2025. As tariffs reshape trade flows and federal revenue, their long-term sustainability remains a critical question for policymakers.
REFH – Newshub, 12 August 2025
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