Tariffs can reduce trade deficits, shrink federal budget deficits, enable income tax cuts, boost manufacturing and leverage trading partners to lower barriers to our exports, but too often those are often competing objectives with trade-offs.

President Donald Trump has not articulated priorities or a coherent strategy. His confused messaging depresses business and consumer confidence, slows growth and imposes recession risks.

At more than 6% of GDP, the federal budget deficit exceeds business and household savings after private business and state government borrowing needs are satisfied.

The federal deficit is partially financed by selling Treasury securities and other private assets abroad. This permits Americans to consume more than they produce through a 4% of GDP trade deficit.

Since January, Trump has increased the average tariff on U.S. imports by 12 percentage points.

This should reduce imports overall but also shift considerable sourcing from China to lower tariffed countries like Vietnam, Malaysia and Mexico.

Allowing for some substitution among sources of imports and domestic products for imports, tariff revenue could increase $300 billion or about 1% of GDP.

In 2024, personal and corporate tax receipts were $3 trillion.

Devoted to reducing the budget........

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