The US government collected roughly $80 billion in tariffs and fees in the fiscal year ending September 30, which is a small fraction compared to the $2.5 trillion from individual income taxes and $1.7 trillion from Social Security and Medicare taxes.
Here's a more detailed breakdown:
Tariffs as a Revenue Source:
Tariffs are taxes on imports, collected when foreign goods cross the U.S. border.
The money collected from tariffs goes to the U.S. Treasury to help pay the federal government's expenses.
In the fiscal year ending September 30, the government collected around $80 billion in tariffs and fees.
This amount is a small fraction of the total government revenue, which is primarily derived from individual income taxes and Social Security/Medicare taxes.
For example, in the fiscal year 2024, the total federal revenue was $4.9 trillion, with individual income taxes contributing $2.5 trillion and Social Security and Medicare taxes contributing $1.7 trillion.
Historical Context:
Tariffs were a major source of revenue for the federal government in the past, accounting for a significant portion of total income.
However, as global trade grew after World War II, the government needed larger revenue streams to finance its operations, and the reliance on tariffs declined.
Current Situation:
Tariffs still exist and are used as a tool for trade policy, but they are not a primary source of revenue for the government.
The U.S. has moved away from protectionism in favor of trade liberalization, with agreements like the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) having dramatically lowered global tariffs.
Today, roughly 70% of all products enter the U.S. duty-free.
Recent Developments:
The Trump administration imposed tariffs on a broad range of goods in his first term, which led to a trade war with China and other countries.
These tariffs led to retaliatory measures from other countries, and the economic impact of these tariffs is still being debated.
