Tariffs aren't meant for revenue and will shrink over time, Bessent says
Add Axios as your preferred source to
see more of our stories on Google.
Treasury Secretary Scott Bessent addresses reporters outside the White House. Photo: Saul Loeb/AFP via Getty Images
The purpose of tariffs is not to generate revenue, and their revenue-boosting benefits will eventually shrink as domestic tax receipts rise, Treasury Secretary Scott Bessent said Sunday.
Why it matters: President Trump keeps touting tariff revenue as a solution to various problems, even as the Supreme Court weighs whether the administration is using tariffs as an illegal tax.
- Just Sunday morning, he promised tariffs would pay down the national debt and fund a $2,000 dividend for most Americans.
- Administration officials have frequently talked about tariff receipts of up to $1 trillion a year offsetting deficits a decade from now.
The big picture: The tension about tariffs' true purpose was evident at the Supreme Court this week, as the government attempted to defend Trump's authority to impose them.
- Trump imposed sweeping tariffs under the International Emergency Economic Powers Act, a 1977 law that empowers presidents to respond to national security threats but had never been used for tariffs before.
- Justices appeared highly skeptical of the argument that tariffs aren't a tax and don't have revenue as their primary purpose.
- If the court rules against the administration, that would toss potentially hundreds of billions of dollars a year in revenue out the window.
What they're saying: "Over the course of the next few years, we could take in trillions of dollars … but the real goal of the tariffs is to re-balance trade and make it more fair," Bessent told ABC's "This Week," touting the eventual benefits of manufacturers re-shoring their operations in the U.S.
- "What would happen over time is, we would take in substantial money as factories come back to the U.S.," he said.
- "Tariff income will be substantial at the beginning, it will come down, and then domestic tax revenues will climb as corporate taxes go up and all these high-paying jobs are created."
By the numbers: The government took in $195 billion in customs duties in the fiscal year that ended Sept. 30, well more than double the prior year.
- Bessent himself has said that could eventually top $500 billion a year; Commerce Secretary Howard Lutnick has said it could double that.
The intrigue: Challenged on the disconnect — Trump touting plans for tariff revenue, while the government argues that's not their purpose — Bessent replied: "It's completely consistent that the revenues come in at the beginning, then as we re-balance, which is the goal of this, bring back high-paid manufacturing jobs to the U.S., then it will then morph into domestic tax revenues."
The bottom line: The fate of the tariffs now rests with the Supreme Court.
- If they're struck down, the government will have to replace that revenue somehow — whether that's their purpose or not — or watch deficits grow even faster.
