President Donald Trump has said his new tariffs, which start rolling out Saturday, will bring in enough money to "make America wealthy again."
"We're going to start being smart and we're going to start being very wealthy again," Trump said Wednesday at a ceremony in the White House Rose Garden shortly before signing an executive order that will enact a baseline 10% tariff on all trading partners outside of Canada and Mexico, plus additional "reciprocal" tariffs on select countries. "They've taken so much of our wealth away from us. We're not going to let that happen."
So, where is that money going?
Trump has painted tariffs as a tool to raise revenue and offset costs associated with proposed tax cuts, going so far as to float the idea of replacing income tax with tariffs.
"You're going to see billions of dollars, even trillions of dollars, coming into our country very soon in the form of tariffs," Trump said last week.
Here’s what we know about the potential revenue from Trump’s tariffs and where the money could flow.
How do tariffs work?
A tariff is a tax on goods imported from another country. Though Trump has said foreign countries foot the bill, it's the importers ‒ often U.S. companies ‒ that pay these taxes. Companies tend to pass on at least part of those higher costs to consumers, which is why economists say tariffs can be inflationary.
Trump's 2025 tariffs are expected to raise consumer prices by 2.3% on average in the short run, costing the typical U.S. household roughly $3,800 in annual disposable income, according to an analysis Wednesday from the Yale Budget Lab.
The impact of tariffs is coming: Which households will Trump's new plan cost most?
Where does the tariff money go?
The money from tariffs goes to the Treasury Department and enters the general affairs budget, Felix Tintelnot, an associate professor of economics at Duke University in North Carolina, told USA TODAY in March. From there, it can be used “essentially for anything.”
Looking back to Trump’s tariffs against China during his first term could offer clues on where the money may go, though. Retaliatory tariffs from China were a blow to U.S. farmers, and Trump authorized $28 billion in relief payments to compensate farmers for their losses.
"We might end up spending some of the revenue on bailing out particular sectors affected by retaliatory tariffs, as happened in 2018," Tintelnot said.
Tariff revenue also could be used to address the budget deficit or fund Trump’s plans for tax cuts, according to Tintelnot, although it's not yet clear whether they would raise enough money to cover the full costs. Extending Trump’s 2017 tax cut alone is expected to cost roughly $4 trillion over the next decade.