President Donald Trump announced an intention to largely abolish the federal income tax, proposing to replace the lost revenue with higher import tariffs.

Policy announcement

According to Trump, the plan would almost entirely remove the individual income tax and substitute tariff revenues to balance federal receipts and expenditures.

The proposal frames tariffs as the principal mechanism for financing government operations while reducing or eliminating tax burdens on households and wage earners.

Economic and market remarks

Trump also pledged to maintain the stock market at historic highs and linked equity performance to retirement savings held in private accounts.

«a big plus»

He described rising equity values as beneficial for 401(k) retirement accounts and emphasized his administration's focus on market strength as a priority.

Considerations and context

Shifting fiscal reliance from income tax to tariffs would change the government’s revenue composition and could affect trade flows, consumer prices, and corporate margins.

The proposal, as presented, centers on using import levies to compensate for forgone tax receipts without specifying detailed schedules or sectoral exemptions in the announcement.