President Donald Trump speaks before signing decrees in the oval office on March 6, 2025.
Alex Wong | Getty images
President Donald Trump says prices will make the United States “rich“But these riches will probably be much less than what the White House is waiting for, said economists.
The ultimate sum could have great ramifications for the American economy, the country’s debt and legislative negotiations on a set of tax cuts, economists said.
The White House Commerce Advisor Peter Navarro said the prices estimated about $ 600 billion a year and 6 dollars over a decade. Automotive prices would add an additional $ 100 billion per year, He said On “Fox News Sunday”.
Navarro has projected as the United States plans to announce more rates against American trade partners on Wednesday.
Economists expect the Trump administration’s pricing policy would generate a much lower amount of income than Navarro complaints. Some project total income would be less than half.
About $ 600 billion at $ 700 billion per year “is not even in the field of possibility,” said Mark Zandi, chief economist at Moody’s. “If you reach $ 100 billion at 200 billion dollars, you will be very lucky.”
The White House refused to respond to a request for CNBC comments on pricing income.
The “mental mathematics” behind pricing income
There are large questioning points on the scope of prices, including details such as quantity, duration, products and countries affected – which all have a significant impact on total income.
The White House considers a 20% rate on most imports, The Washington Post reported Tuesday. President Trump launched this idea on the campaign track. The Trump administration can ultimately opt for a different policy, such as countries by countries based on the respective trade and non -traditional obstacles of each country.
But a tariff rate of 20% seems to line up with Navarro’s income projections, economists said.
The United States imported About 3.3 billions of goods in 2024. The application of a tariff rate of 20% to all these imports would bring about $ 660 billion in annual income.
“It is almost certainly the mental mathematics that Peter Navarro is doing – and that mental mathematics jump certain crucial stages,” said Ernie Tedeschi, director of the Yale Budget Lab budget and former chief economist of the White House economic advisers during the Biden Administration.
The commercial advisor to the American president Donald Trump Peter Navarro speaks to the press outside the White House on March 12, 2025 in Washington, DC.
Kayla Bartkowski | Getty images
Indeed, a precise estimate of income must take into account the many economic impacts of prices in the United States and worldwide, said economists. These effects combine to reduce income, they said.
A 20% wide rate would increase around $ 250 billion a year (or 2.5 dollars billions over a decade) when taking these effects into account, according to Tedeschi, citing a Yale budget laboratory analysis Posted on Monday.
There are ways to increase higher sums – but they would involve higher rate rates, economists said. For example, a price of 50% across the edge would increase around $ 780 billion per year, according to to economists from the Peterson Institute for the International Economy.
Even this is an optimistic evaluation: it does not explain lower American economic growth due to reprisals or the negative growth effects of the prices themselves, they wrote.
Why the income would be lower than expected
Prices in general Increase prices for consumers. A 20% wide rate would cost the average consumer of $ 3,400 to $ 4,200 per year, according to the Yale Budget LAB.
Consumers would naturally buy less imported goods if they were more expensive, economists said. An inferior demand means fewer imports and less pricing income from these imports, they said.
The prices should also trigger a “reduced economic activity,” said Robert McClelland, principal researcher at the Urban-Brooking Tax Policy Center.
More personal finances:
Economists say that “value -added taxes” are not a commercial barrier
The prices are “ lose-person ‘for American jobs and industry
Why uncertainty makes the stock market pass
For example, American companies that do not transmit tariff costs to consumers via higher prices would probably see the profits undergo (and their income tax drop), said economists. Consumers could withdraw the business expenses, profits and tax revenue from additional abolition, economists said. Companies that take a financial hit could dismiss workers, they said.
Foreign nations should also retaliate with their own prices on American products, which would injure companies that export products abroad. Other nations may undergo an economic slowdown, which further reduces demand for American products.
“If you get a tariff rate of 20%, you will get a tear recession, and this will undermine your budgetary situation,” said Zandi.
There will also probably be a certain level of non-compliance with the pricing policy and the Cup for certain countries, industries or products, economists said. For example, when the White House raised prices on China in February, it indefinitely exfined from imports of “minimis” worth $ 800 or less.
The Trump administration could also channel certain pricing income to pay certain parties injured by a trade war, economists said.
President Trump did it during his first mandate: the government sent $ 61 billion in “rescue” payments to American farmers who faced reprisals, which was almost all (92%) of pricing income on Chinese products from 2018 to 2020, according to to the Council of Foreign Relations.
Prices will also likely have a short lifespan, diluting their potential impact on income, economists said. They are issued by decree and could be easily defeated, whether by President Trump or a future president, they said.
“There is no probability that these prices will last 10 years,” said Zandi. “If they last until next year, I would be very surprised.”
Why this counts
The Trump administration said that the prices “will be one of the high -level ways they will try to compensate for the cost” to pass a set of tax discounts, said Tedeschi.
The extension of a tax on tax drop in 2017 signed by President Trump would cost $ 4.5 billion over a decade, according to to the tax foundation. Trump also called on other tax reductions such as no tax on advice, overtime or social security services, and a tax deduction for car loan interest for American manufactured cars.
If the prices do not cover the total cost of such a package, then republican legislators should find discounts elsewhere or increase the country’s debt, economists said.