Politicians and economists say that President Donald Trump’s “liberation day” tariff rollout amounted to a historic US tax hike.
“Donald Trump just imposed the biggest tax hike of our life,” published by Democrat California Gov. Gavin Newsom, who was featured in X on April 2nd.
Other Democratic politicians made similar claims, including Illinois Gov. JB Pretzker, U.S. Sen. Chuck Schumer and U.S. representative Jared Moskovitz, but Republican Mike Pence called it “the biggest peace tax hike in US history.”
It is clear that the changes based on the April 2nd plan are historic. Global Tariffs Trump has announced that it targets almost every country in which the US trades. All countries on the list face 10% baseline tariffs, while others face 50% higher tariffs.
Estimates vary across the range of tariff hikes due to Trump’s travels on certain tariffs and the unpredictability of global markets. Plans could change as Trump has repeatedly posted on social media that he is negotiating with the country over tariff rates.
If we measure how much the average tariff rate has increased, Trump’s tariff hikes are the biggest rank in almost a century. Estimates differ when measured by the tax revenues brought by customs duties.
It was five of the seven estimates that Al Jazeera ranked these new tariffs as the biggest tax increase since 1951, and the most conservative estimate was the largest ranking since 1982.
Is the increase in tariffs the same as a “tax increase”?
Experts say it’s fair to call tariffs taxes.
“These are taxes that apply to US imports,” said Erica York, vice president of federal tax policy at the Tax Foundation, a nonpartisan think tank.
Customs duties are import taxes paid by businesses to the federal government when purchasing goods or materials from other countries. Companies often communicate their increased costs to consumers.
Reports from economic policy think tanks with a broad range of political views describe tariffs as regressive taxes. In other words, low-income groups become more intense due to rising costs.
Economists say this tariff rate hike has not been seen in almost a century.
Measurement of customs hiking has challenges. Customs fees vary by country and include exemptions for certain products.
Trump’s tariff policies were volatile, tariffs were announced, and sometimes quickly retreated within a day. They can change depending on the way the country negotiates with the US or respond with their own customs duties.
One way to measure the scale of this tariff hike is to compare the new average effective tariff rate with historical rates.
Various economic policy groups, including the Tax Foundation, Yale Budget Lab and JPMorgan Chase, were estimated to have new tariff rates of 16.5%, 22.5% and 27%. Each rate is the largest in almost a century.
When Trump took office, the average effective tariff rate was 2.4%.
When measuring new tariffs with expected revenue, it is still historic
Another way to measure the impact of tariffs is through anticipated revenue collection. The more revenue the government collects, the bigger the hike.
The Trump administration argued that by increasing revenue through tariffs, other federal taxes could be reduced. Economists previously said high tariffs are unlikely to generate enough income to bring about meaningful tax cuts for typical Americans.
Some of the largest estimates of tariff revenue come from the Trump administration. In an interview with Fox News on March 30, White House trade adviser Peter Navarro said that non-auto tariffs “will raise about $600 million (annual) and about $6 trillion in a decade,” adding $100 billion a year from car fares.
One way for economists is to place these estimates in a historical context. This is to examine the increase in tax revenue as a percentage of gross domestic product (GDP).
The 2006 Treasury Report calculated this value of all major tax bills since 1940. Most of the largest tax increases took place during the wartime of the 1940s and 1950s.
If Navarro increases tax revenues at an estimated amount of $700 million, it accounts for around 2.3% of US GDP, which is the largest increase since 1942.
Navarro did not elaborate on how it reached that $700 million figure, but CNN determined that a 20-25% tariff on goods worth $3.3 trillion is needed.
Some economists questioned Navarro’s presumption. “To put it bluntly, Navarro’s estimates are completely wrong,” York told Politifact. “Taxes reduce imports and mechanically reduce income and payroll tax revenues, when you don’t consider people who are selling too much of the amount of revenue they can earn.”
The US economy will shrink, imports will decline, and other countries may retaliate with their own tariffs, all of which can reduce tax revenue from tariffs.
The Tax Foundation’s revenue estimate for 2025 was $258.4 billion, or 0.85% of GDP, making it the largest tax increase since 1982.
Michael Feroli, chief economist at JPMorgan Chase, provided an estimate of $400 million, or about 1.3% of GDP. He described this as the largest tax increase since 1968, but based on Treasury data, 1.3% of GDP will be the highest since 1951.
Dean Baker, co-founder of the Center for Economic Policy Research, a liberal think tank, told Politifact that some revenue estimates are too low. He estimated nearly $1 trillion in tax revenue.
“The practical issue is that some products are exempt and demand is definitely falling, so there’s nowhere to be that high, but I think even the JPMorgan number is very low,” Baker said.
Five of the seven estimates identified in Trump’s tariff plans are the highest since 1951.