Trump is rolling out more tariffs this month. Where does the tariff money go?

 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 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 so far 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. While 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 a Wednesday analysis from the Yale Budget Lab.

Where does the tariff money go? 

The money from tariffs goes to the U.S. Department of Treasury 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. 

Revenues from tariffs could also be used to address the budget deficit or fund Trump’s plans for tax cuts, according to Tintelnot, although it's not yet clear if they will raise enough revenue to cover the full costs. Extending Trump’s 2017 tax cut alone is expected to cost roughly $4 trillion over the next decade.

How much revenue from tariffs? 

Peter Navarro, Trump’s senior counselor for trade and manufacturing, earlier this week said tariffs are expected to raise $6 trillion in revenue over the next 10 years.

But some economists warn that tariffs can be an unreliable source of revenue.

If the trade war hikes up the cost of goods, American consumers could find themselves pulling back on spending. Companies would be expected to slow their imports, which would mean less tax revenue from tariffs for the government, according to Nancy Qian, an economics professor at Northwestern’s Kellogg School of Management.

The Yale Budget Lab on Wednesday shared a more conservative estimate of $3.1 trillion from all 2025 tariffs over 10 years.

“Whatever revenue they do get, Americans would hope it would go toward subsidizing whoever in the American economy has to bear the costs of tariffs," Qian told USA TODAY in March.

That would likely include consumers, Qian said, although certain Americans would get hit harder than others.  

The Yale Budget Lab found Trump's 2025 tariffs are expected to result in a 4% drop in disposable income among lower-earning households, compared with 1.6% for the highest-earning households.

“When you increase the price of goods and services, it’s harder for the poor to pay for them. And they don't have discretionary income, so they’ll stop buying things that aren't necessities," said Susan Ariel Aaronson, research professor of international affairs at George Washington University.


Here's what countries and products will be most impacted by President Trump's new tariffs

President Donald Trump's new tariffs include additional tariffs on some of the world's biggest exporters of clothing, electronics and more.

Bailey Schulz

USA TODA

President Donald Trump said his new tariffs will bring in enough revenue to "make America wealthy again." How does the administration plan to use that money?

Trump is rolling out more tariffs this month. Where does the tariff money go?

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