The federal government is projected to collect roughly $300 billion annually from tariffs imposed under President Donald Trump, though Moody’s Analytics chief economist Mark Zandi warns they are an unreliable long-term revenue source, especially in a recession. According to a report by Yahoo Finance, the average effective tariff rate has risen to 20.2%, the highest since 1911, based on data from Yale’s Budget Lab.
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Despite the revenue boost, tariffs fall far short of closing the federal budget deficit, which is expected to reach nearly $2 trillion this year. Zandi, speaking on the Concord Coalition’s Facing the Future podcast, noted that tariffs can be easily reversed since they were enacted via executive order. Legal challenges also question their validity under the International Emergency Economic Powers Act.
Goldman Sachs estimates that 67% of tariff costs are passed on to consumers, functioning similarly to sales taxes. Meanwhile, IndexBox data shows weakening import demand in key sectors, further straining economic stability. Zandi cautioned against relying on tariffs for future fiscal planning, stating, “If you did do that, we’re setting ourselves up for an even more dire, darker fiscal situation down the road.”
With nearly half of U.S. industries already cutting jobs—a precursor to recession—Zandi predicts tariffs will likely be reduced during an economic downturn to alleviate consumer costs. The White House maintains that foreign exporters, not Americans, bear the brunt of tariffs.
