In recent FB exchanges, a number of people have raised the escalating debt in this country as reason for implementing tariffs. So I decided to drill into it a bit. Our national debt sits at about $36.6 trillion. For those keeping score at home, that’s about $107,000 of debt per citizen and $323,000 of debt per taxpayer. For fiscal year 2025 (which ends September 30, 2025), the government is projecting approximately $5.5 trillion in receipts and $7.3 trillion in expenditures, so we are adding another $1.8 trillion to the debt this fiscal year. If current spending levels continue, well, you can imagine where it goes.
Tariffs Will Not Eliminate The Deficit
With this as backdrop, tariffs might seem like a good idea on the surface. Let’s have foreign companies pay down our debt through the collection of tariffs on imports. Except for a few things. First, we do not yet know precisely what trade deals will be cut, but there is no scenario where tariffs alone will eliminate our deficit. That doesn’t mean they can’t be part of the solution, though, which brings me to my second point.
Tariffs Are Being Used To Support Tax Cuts, Not To Decrease The Deficit
The Admin seems to be selling the tariffs, not as a way to reverse the deficit and help pay down the debt, but as a way to support income tax cuts. Income tax cuts sound great, except when you consider that they do the opposite of eliminating the deficit. I have seen estimates suggesting that the proposed tax cuts will cost $5-11 trillion over ten years. The current proposal in the Senate includes tax cuts and raising the debt ceiling by another $5 trillion. If we are raising the debt ceiling, then maybe it’s not the best time to be implementing tax cuts. As a country, we can’t afford tax cuts. For every dollar of tax revenue that we eliminate, we need to find that dollar of revenue plus some from another source.
Tariffs Will Be Passed On To US Companies And US Consumers
Third, tariffs are taxes on consumers, not on foreign countries. Foreign exporters will raise prices to US retailers who will in turn raise prices to consumers. Thus, even if the Admin passes income tax cuts, it will really be just a shell game of shifting from taxing income to taxing consumption. We will not experience a real tax decrease. And tariffs add to inflation, so our dollars will not go as far.
Tariffs Will Not Help Grow The Economy
Fourth, tariffs are widely considered to be anti-growth when we ought to be pursuing pro-growth policies and strategies. The surest way to increase tax revenue is to grow the economy. In theory, tariffs may help us at home (though I don’t believe they will), but if they are met with reciprocal tariffs, as they have been so far, it will make it more difficult for US companies to access foreign markets, which is where the growth opportunities are.
DOGE Is Not The Answer
I know many people are excited about the work being done by DOGE and others to reduce the size of government. I certainly applaud work to reduce waste in government. However, we need to keep in mind that the federal workforce accounts for only about 4.3% of the federal budget. The various workforce reductions (if lawful) and the DOGE cuts will not come anywhere near eliminating the deficit.
We Borrowed The Money And We Will Pay It Back
The harsh reality that politicians do not want to discuss is that we can’t cut and tariff our way out of the debt crisis we are facing. We spent the money, and we are going to have to pay it back. It will be painful for all of us, and for our children, and likely for our grandchildren. Any politician who tells you otherwise is ignoring the arithmetic. The first step in solving a problem is acknowledging that we have one and calling it what it is. We are addicted to debt. Our government is the worst offender. We need to break the cycle.