Trump Tariffs To Hit U.S. Farming, Mining, And Manufacturing Sectors

President Donald J. Trump's new tariffs could generate trillions of dollars in new federal government revenue over a decade.

Agriculture, mining, and manufacturing would be hit hardest due to their relatively high dependence on foreign demand for exports.

However, the net gain would be reduced by the measures' damage to the U.S. economy and the likely retaliation from other countries, Warwick J. McKibbin of the Peterson Institute for International Economics (PIIE) and the Australian National University (ANU), and Geoffrey Shuetrim of McKibbin Software Group Pty. Ltd. wrote for PIIE.

Due to uncertainty about which permanent tariff increases Trump might eventually implement, the authors modeled the effects of 10-, 15-, and 20-percentage-point increases in tariffs on all goods imports.

In each scenario, the U.S. would experience slower economic growth, with the impact amplified if other economies retaliate by imposing equivalent tariffs on U.S. goods.

Higher tariff rates generally generate more revenue, although this is partially offset by reduced imports. The tariffs also lower tax revenue from companies and households by decreasing investment, employment, and real wages.

Notably, in a scenario involving retaliation, a 20-percentage-point tariff increase yields a smaller revenue gain than a 15-point increase because imports drop more sharply, and the economic damage reduces tax revenue from businesses and consumers.

This results in a total net revenue gain of $791 billion over a decade—the smallest among the scenarios modeled. The U.S. sectors hit hardest would be agriculture, mining, and manufacturing, due to their relatively high dependence on foreign demand for exports.