“We’re going to raise about $100 billion with the auto tariffs alone … In addition, the other tariffs are going to raise about $600 billion a year, about $6 trillion over a 10-year period.”
Navarro’s absurd claim of $6 trillion in revenue from Trump’s tariffs
Basic economics shows the revenue would be at most half as much — and probably less than that.
April 9, 2025 The Washington Post
Analysis by Glenn Kessler
As soon as Navarro made this bold statement, we contacted the White House for an explanation of his math. We were told to wait until after the president made his announcement of the tariff plan on April 2. During the speech, after Trump claimed the tariffs would raise “trillions and trillions of dollars to reduce our taxes and pay down our national debt,” we again asked for the numbers — and were told to wait until the speech was over.
We asked again two more times. We’re still waiting for an answer. But that hasn’t stopped other experts from running the numbers — and finding Navarro’s claim implausible.
The Facts
Six trillion is the administration’s new favorite number. That’s what Navarro claims will be the revenue raised by tariffs. That’s also the size of the tax cut package Trump is pushing through Congress. Navarro often suggests the tariff revenue will make up for the reduction in the taxes — though it also means that there would be a huge transfer of the burden of running the government from the wealthy (who will get most of the tax cuts) to the less wealthy (who buy most of the imported products).
The value of stocks traded on U.S. markets also fell $6 trillion in the first two days after Trump’s tariff announcement — but that’s probably just a coincidence.
Because the White House is mum on Navarro’s math, we can only guess. But experts we consulted think the methodology is pretty simple — and simpleminded.
The United States imported $3.3 trillion of goods in 2024, according to the Census Bureau. Navarro appears to have rounded that to $3 trillion and assumed a 20 percent universal tariff from all those products, which garners $600 billion in tariff revenue a year. Presto — over 10 years, that gets you $6 trillion.
But that’s not how the world works, which is why organizations such as the Tax Foundation and the Budget Lab at Yale University have developed estimates that are more than 50 percent smaller.
“Navarro’s math is a bogus way to estimate tax revenue arising from tariffs,” said Erica York, vice president of federal tax policy at the nonpartisan Tax Foundation.
She said that’s because he’s ignoring the effects of people changing their buying habits when tariffs increase, countries retaliating and the subsequent impact on other revenue sources.
For instance, retaliatory tariffs raise the after-tax price of U.S. goods in foreign jurisdictions, making them less competitively priced and leading to layoffs in the United States. Those job losses then reverberate through the shrinking U.S. economy, including lower income and payroll tax collections.
Both the Tax Foundation and the Budget Lab have sophisticated models that consider these factors and other complexities. But if you were making the calculation on the back of a napkin, as Navarro appears to have done, here are some elements to consider.
First, basic economics about “trade elasticity” — how international trade responds to changes in trade barriers — suggests a 20 percent tariff reduces imports by at least 20 percent. (It could be higher.) So that $3.3 trillion in imports shrinks to $2.64 trillion after a 20 percent tariff is imposed.
Then you have to consider that the published import figures include the cost of tariffs too. This is known as the tax inclusion rate. You need to take that out, or else you are double-counting. In this case, the tax inclusion rate would be 16.7 percent (trust us on this), so that reduces the import figure to $2.2 trillion.
Applying the 20 percent tariff to $2.2 trillion yields $440 billion in tariff revenue a year. That’s $4.4 trillion over 10 years, not $6 trillion — but we’re not done yet!
Whenever higher tariffs are introduced, shippers and importers figure out ways to evade the higher levies. This is known as the noncompliance rate. Estimates of the noncompliance rate vary between 10 percent and 15 percent. We will use 10 percent, which means $44 billion in gross revenue will not be collected annually.
Finally, new tariffs reduce the revenue derived from individual and corporate income taxes and payroll taxes. That’s because tariffs — contrary to Trump’s rhetoric — are a tax and thus reduce the income (or jobs) of workers and companies, so tax collections fall elsewhere in the government.
The Congressional Budget Office has calculated that over the years, 21 percent to 25 percent of estimated revenue from indirect taxes such as tariffs was lost when other revenue fell. We will use the midpoint of 23 percent. That further reduces revenue by $101 billion.
That brings us down to $295 billion in net tariff revenue a year, or nearly $3 trillion over 10 years — half of Navarro’s figure.
As we said, this is just a simple calculation. We haven’t even begun to add in the impact of lower economic growth and other factors. The Budget Lab concluded the effective tariff rate will be 22.5 percent, the highest since 1909, with apparel prices rising 33 percent and food prices climbing 4.5 percent, triple recent grocery inflation.
Negative dynamic effects — incorporating the effects of the tariffs on the American economy — would reduce the $3 trillion in tariff revenue by $588 billion over 10 years, so total tariff revenue would be about $2.4 trillion, the Budget Lab said.
The Tax Foundation’s model concluded revenue would be $2.85 trillion over 10 years before dynamic effects. With dynamic effects, including the impact of retaliation from other countries, revenue would be reduced to just under $2.3 trillion.
Both estimates are significantly lower than $6 trillion.
The Pinocchio Test
Navarro’s claim that Trump’s tariffs would raise $6 trillion has received wide exposure — and the White House has not disputed it, even as it has avoided explaining it. Credible analyses by respected economists find the revenue from the tariffs would be much lower — less than half the figure he has touted in numerous interviews.
Navarro earns Four Pinocchios.
Four Pinocchios
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