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The United States is experiencing another political and economic shockwave. President Donald J. Trump has suggested that his administration is seriously considering a historic shift: a dramatic reduction — and potentially a complete elimination — of the federal income tax. According to Trump, the move is becoming realistic thanks to soaring tariff revenues that could offset the loss of tax income.
Trump claims that tariff collections have exploded since the new tariff system was launched in early 2025. In October alone, tariff revenues reportedly reached $31 to $34 billion, marking some of the highest monthly totals in modern U.S. history. If this trend continues, the White House argues that the federal budget could be funded largely through tariffs — echoing a system the U.S. relied on in the 19th century.

Trump says tariffs could replace income taxes for millions of Americans
Speaking to U.S. military personnel, Trump said that in the coming years Americans may see their taxes “significantly reduced” and possibly “completely eliminated.” He hinted that the federal income tax could be replaced almost entirely, because the new tariff regime is “bringing in such massive revenues.”
The president has not yet presented a detailed roadmap explaining how the phased dismantling of the federal income tax would work. However, it is clear that his vision leans toward restoring an old model — the pre-1913 era, before the 16th Amendment introduced federal income taxation.
Trump argues that the burden should shift from U.S. citizens to foreign producers and has repeatedly claimed that “Americans have been taken advantage of for decades.”

What Trump’s tariff policy looks like — and why he believes it works
Today’s U.S. tariff system is the most aggressive in decades. Trump has imposed duties ranging from 10% to 50% on most imports, fundamentally reshaping the structure of foreign goods entering the country.
His stated goals include:
boosting U.S. manufacturingreducing dependency on Chinaimproving America’s trade balanceusing tariffs as leverage in geopolitical negotiations
Trump also uses tariffs as a tool for broader policy objectives, including pressuring China to curb fentanyl flows and urging Mexico and Canada to tighten border and migration controls.

Legal fights and rising global tensions
This sweeping tariff strategy has not gone unchallenged. Legal experts argue that the administration bypassed Congress by invoking emergency powers from 1977. Earlier this year, a U.S. appeals court ruled that most of the tariffs were unlawful, though it temporarily kept them in place, creating a legal gray zone.
The White House has appealed to the Supreme Court to overturn that ruling — a process that may take months. Meanwhile, negotiations continue with key trade partners, especially China, Canada and Mexico, who have been warned they could face even higher tariffs if they fail to meet U.S. demands.
Trump also introduced the idea of “tariff dividends,” a program that would redistribute tariff revenues directly to Americans — at least $2,000 per person — excluding high-income households.

Economic impact: a revolution or a high-risk experiment?
Replacing the federal income tax with tariffs would be a monumental shift. Critics warn that tariffs can increase consumer prices, burden U.S. businesses and heighten inflationary pressures. Supporters argue that stronger domestic production, a more competitive U.S. economy and massive tariff receipts could power a new era of growth.
Tariff revenues are indeed reaching record levels. The core question is whether this influx is sustainable — and whether it can truly finance the complete elimination of federal income taxes.
Trump believes America can return to a model abandoned more than a century ago. If the plan gains traction, it would become one of the most consequential fiscal transformations in modern U.S. history.

#TRUMP , #USTariffs , #FederalReserve , #CryptoMarkets , #Fed

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