A MARTÍNEZ, HOST:
President Trump explained this week what he plans to do with the $29 billion in tariff revenue the government collected last month.
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PRESIDENT DONALD TRUMP: We have a lot of things we can do. You know, one of the questions asked of me this morning is, you going to make a dividend to the people? And the purpose of what I'm doing is primarily to pay down debt, which will happen in very large quantity.
MARTÍNEZ: It might be hard to kind of picture what $29 billion means, especially compared to the national debt. So to put those numbers in perspective is NPR White House correspondent Danielle Kurtzleben. Twenty-nine billion sounds like a lot, Danielle, is it?
DANIELLE KURTZLEBEN, BYLINE: Well, it's very big for tariff revenue. At that rate, the government could pull in in a few months what it received in tariff revenues all of last year. So yes, it's big. But then again, it pales in comparison to the main way the government gets money, which is income taxes, individual and corporate. I talked to Shai Akabas. He's vice president of economic policy at the Bipartisan Policy Center.
SHAI AKABAS: Historically, tariff revenue has never accounted for more than about 2% of total federal government revenues in the modern era. And with the tariffs that are in place today, that could go up to 5% or perhaps even higher.
KURTZLEBEN: Now, 5% of all revenue, that is not nothing, but it's also not big enough to fulfill some of Trump's more outlandish promises. For example, he has said occasionally that tariffs could replace income taxes. Well, no, that's not going to happen. And we should add here that this revenue is coming from Americans because businesses in America are directly paying the tariffs to the government. And that means when they raise prices, the tariffs come indirectly out of consumers' pockets.
MARTÍNEZ: Right. Now, what about using that money to pay down debt?
KURTZLEBEN: Well, yeah, any federal revenue, of course, helps on that front. But then again, national debt is $37 trillion, $37 trillion right now. So tariffs are tiny in comparison. But, yeah, it is revenue. But let's consider a closer price comparison here. Look at the Big Beautiful Bill that Trump just signed that will cost $3.4 trillion over the next decade. Now, tariffs, meanwhile, are estimated to bring in $2- to 3 trillion over the same period, according to a few different independent estimates. So that new tariff revenue is considerable, but also, it likely won't cover the debt that this administration just added.
MARTÍNEZ: Yeah. Now - but Trump is enacting more tariffs all the time, so the money they could bring in could grow, too, right?
KURTZLEBEN: Absolutely. But there are some real constraints on how much that revenue could climb. You see, tariffs are already dragging on the economy, and that's according to Jessica Riedl at the right-leading Manhattan Institute, and that hurts the bigger pot of revenue that the government needs to run. So while there's more tariff revenue now...
JESSICA RIEDL: That must be offset against the lower revenue we're bringing in in income payroll and corporate taxes as a result of the economy growing at only half the rate it was forecast before the year started.
KURTZLEBEN: And not only that, she also pointed out that Trump is hoping that these tariffs are going to boost U.S. manufacturing. But then again, the more things are made here, the less tariff revenue you get from imports. Think about Apple as an example. If they make more iPhones in the U.S., then those U.S.-made iPhones generate nothing in tariffs.
MARTÍNEZ: Yeah. Makes sense. There's also a court case brought by several states against tariffs. One court already found that they were illegal. If that ruling, Danielle, gets upheld, what happens then?
KURTZLEBEN: Well, tariff law experts have told me that if the courts eventually find these country-specific tariffs to be illegal, those tariffs would likely have to be refunded. Now, that would be, first of all, a potential huge logistical headache, but also, it could just really undercut Trump's economic strategy.
MARTÍNEZ: All right, that's NPR's Danielle Kurtzleben. Thanks a lot.
KURTZLEBEN: Thank you.
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