External Revenue Or Protectionism: A Tariff Can’t Be Both

President Trump wants to replace the federal income tax with tariffs as primary revenue source for the US federal government.

Trump has claimed that “tariff” is the most beautiful word in the English language, even more so than “love.

But is a tariff capable of doing such a thing? A far more plausible scenario in the realm of international trade is a relatively elastic supply curve.

Tate Fegley : There is no free lunch: tariffs are being paid by domestic consumers.

He says there is a conflict between the goals of having a tariff protect domestic producers on the one hand and be revenue-generating on the other hand.

The more successful the tariff is in this regard, the fewer imports there are and the less tariff revenue there is.