As Jim noted, the Committee for a Responsible Federal Budget released an analysis claiming that “Tariffs Are Generating Meaningful New Revenue.” Maybe they are — but CRFB doesn’t really show it. That’s because of the crucial caveat: “Estimates also exclude macroeconomic effects, which could reduce the net (real) deficit reduction from tariffs to the extent they lead to slower growth and higher inflation.”
Nobody has ever doubted that increasing tariffs, if the increase is not to a prohibitive level, would bring in extra tariff revenues. But if the tariffs reduce economic growth, lost income and lost corporate tax revenue have to be subtracted from those extra tariff revenues. It’s entirely conceivable that the net effect on revenues is marginal or even negative.
CRFB does some good work, but I think it has glossed over this point — especially in the headline it used.
Update: My AEI colleague Kyle Pomerleau points out that the tariff revenue estimates are overstated even if you ignore all possible effects of the tariffs on economic growth. Income and payroll taxes are applied after the tariffs take their bite and so have to yield less revenue. Whatever your estimate of the revenues from tariffs, you have to cut it by about 25 percent before you even consider the effects on growth.