With President Donald Trump officially announcing his "Reciprocal Tariff" policy, U.S. trade policy is shifting decisively toward protectionism. During a White House press conference on April 2, 2025, Trump declared, "The United States will no longer tolerate unfair trade," adding, "We are implementing reciprocal tariffs immediately to create equal trade conditions." He reaffirmed his ambitious goal of generating $700 billion in annual tariff revenue.
$700 Billion Tariff Revenue Goal: Lacking Realism
Trump aims to increase the U.S.’s current tariff revenue (approximately $80 billion) nearly ninefold to $700 billion. However, Bloomberg, in an opinion piece, labeled this target "unrealistic." The outlet noted, "$700 billion equates to about 2.4% of U.S. GDP, a level tariff revenue has not exceeded since the 1870s. Sustained levels above 2% only occurred in the 1820s and 1830s."
Trump often cites William McKinley, the so-called "Tariff President," as inspiration. Yet Bloomberg pointed out, "Even during McKinley’s era, tariff revenue hovered in the mid-1% range of GDP," underscoring that Trump’s goal is historically unprecedented.
Suppressing Imports vs. Boosting Tariff Revenue: A Contradiction?
The core of Trump’s reciprocal tariff strategy is to curb imports from overseas. Bloomberg, however, highlighted a structural flaw: "Tariffs are levied on import values, so as imports decline, tariff revenue inevitably shrinks." Analysts suggest that Trump’s dual objectives—reducing imports and massively increasing tariff revenue—may be inherently incompatible.
"Past U.S. Prosperity Due to Tariffs? Unclear"
Trump has touted the late 19th-century model, claiming high tariffs fueled American prosperity. Bloomberg countered, "While the U.S. did rise as an economic power under high tariffs in the late 19th century, it’s uncertain whether tariffs were the primary driver of that growth.
" Among today’s advanced economies, only New Zealand, Australia, and Russia rely heavily on tariffs, while most maintain low-tariff structures.
Bloomberg further warned, "If the U.S. achieves $700 billion in tariff revenue, its tariff-to-GDP ratio would regress to levels seen in Senegal and Mongolia." Given that Americans today are 17.3 times wealthier than Senegalese citizens and 10 times wealthier than their 1900s counterparts, the need to revert to such a protectionist past is questionable.
Bloomberg: "Feasibility and Economic Rationale Both in Doubt"
Bloomberg assessed, "Trump’s pledge isn’t just a return to 1900s-style tariffs—it could become the most tariff-dependent policy in history." The outlet added, "Whether such a tariff regime can be sustained, and its impact on U.S. prices, consumers, and industrial competitiveness, demands serious scrutiny."
The debate over Trump’s tariff shock continues, with its economic viability and broader consequences hanging in the balance.
