Treasury Secretary Scott Bessent stated that tariff revenue generated from President Trump’s policies might be substantial enough to offset federal income taxes. According to Mr. Bessent, the revenue from taxing imports could balance the costs of a significant GOP legislative effort to reform the IRS code. During a White House briefing, he suggested that this approach could feature in upcoming tax legislation. Historically, the U.S. relied on tariff revenue in the early 20th century before transitioning to an income tax system. However, if tariffs lead companies to relocate manufacturing back to the U.S., it may reduce tariff revenue over time. Mr. Bessent emphasized the need for short-term revenue while fostering the revival of the manufacturing sector. Trade negotiations are ongoing under Mr. Trump’s ‘Liberation Day’ tariff plan, which imposes a 10% levy on all imports and higher tariffs on nations with trade imbalances. Countries like India, South Korea, and Japan are progressing in discussions to reduce trade barriers in exchange for tariff relief. China remains a complex case due to retaliatory tariffs exceeding 100%. Despite tensions, Mr. Bessent believes China will seek a resolution due to its export-dependent economy. Tariffs, which are effectively paid by U.S. companies importing goods, have led some retailers to display tariff costs alongside regular prices. The administration aims to incentivize companies to establish operations in the U.S. by allowing write-offs for factory setup costs and reducing energy expenses. Mr. Bessent assured that the tax bill will provide certainty for businesses, dismissing concerns about supply chain disruptions as retailers likely preordered goods.
— new from Washington Times
