So where is Washington turning next? Tariffs. In April, the government collected over $17.4 billion in customs and excise taxes — nearly double March’s revenue and the largest monthly take of Trump’s presidency. But even this figure only covers about 3.3% of monthly federal outlays.

‍

Penn Wharton’s model shows that while tariffs may raise $5.2 trillion over the next decade on paper, they also impose a substantial drag on output. Long-run GDP is projected to fall by up to 6%, with wages down 5% and capital formation decelerating. A middle-income household is projected to lose $22,000 in lifetime income under the new trade regime — double the impact of a corporate tax hike. Trump wants to offset this with a Congressional tax cut bill, lower Federal interest rates, and lower federal spending. But timing is critical.

‍

Tariffs are also fueling a resurgence in inflation expectations. With prices rising, businesses are cutting headcount and passing on costs. The Port of Los Angeles expects cargo volume to fall by 30%, Amazon sellers are laying off workers, and recession risk is climbing. Economic policy uncertainty has reached its highest level since COVID, further curbing investment and hiring.

‍

‍

‍