President Trump Wants To Replace Income Tax With Tariffs, National Economic Council Director Kevin Hassett Says

White House National Economic Council Director Kevin Hassett appeared on Bloomberg Television Friday and said that President Donald Trump wants to replace income tax revenue with tariff revenue. 

“The President believes if we can replace income tax revenue with tariff revenue, we can make everybody better off,” Hassett told Bloomberg in an interview. 

Hassett also attempted to clarify some of President Trump's upcoming trade policies and said there is going to be "some" tariff and its going to be "reciprocal." 

Trump views the EU's 10% tariff on automobiles as "unfair" and reciprocal tariffs to come will be "much broader than autos," Hassett said. 

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Hassett also said the President was "really, really pleased" with the additions of 10,000 auto jobs and 7,000 manufacturing jobs in February's jobs report released Friday and attributed those additions to on-shoring in the face of tariffs. 

Potential Impacts: In November 2024, Tax Foundation projected that potential tariff revenues would make up only a small fraction of total U.S. individual income tax collections.

The think tank estimated that, from 2025 through 2034, a 10% universal tariff would raise $2 trillion, while a 20% universal tariff would raise $3.3 trillion. 

The projections also estimated that a 10% tariff would increase average taxes on U.S. households by $1,253, while a 20% tariff would increase taxes on U.S. households by $2,045.

Erica York, vice president of federal tax policy for Tax Foundation, highlighted some potential downfalls to an income tax replacement policy in a social media post Friday. 

"Swapping some income tax revenue with tariffs will make low and middle income Americans worse off, and likely cost economic output too," York wrote. 

Markets React: Uncertainty surrounding President Trump's trade policies rattled markets this week with the S&P 500 posting its largest decline since September 2024. 

The SPDR S&P 500 ETF Trust SPY, tracking the S&P 500, ended Friday's session up 0.56% at $575.92 and the Invesco QQQ Trust QQQ, tracking the Nasdaq 100 index, closed 0.74% higher at $491.79. 

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