Implement a 10% Global Tariff

Estimated Revenue:
$2.1 trillion

2025–2034. This estimate from the Congressional Budget Office accounts for changes in imports and customs user fees, as well as  “the budgetary effects of changes in economic output, employment, capital stock, and other macroeconomic variables.” 

Summary

Since the United States entered the World Trade Organization agreements in 1994, the U.S. trade deficit has risen from $70 billion in 1993 to over $900 billion in 2024. This proposal would impose a straightforward uniform tariff on all imports starting at 10%. If America continues to run a trade deficit in a given year, the tariff will increase by five percentage points the following year until a trade balance or surplus is reached. Conversely, the tariff would decrease the year after any in which a  surplus is achieved.  

Cumulative trade deficits have driven down America’s net foreign asset position—U.S. foreign liabilities versus foreign assets—to negative $23 trillion. At the same time, the U.S. has seen a 10% decline in industrial output (excluding inflated gains from computer processing improvements) and a 35% decline in production manufacturing jobs since 2000. As policymakers re-embrace America’s long tradition of using tariffs to promote domestic production and industrial strength, they also should recognize tariffs’ benefits as a source of revenue and a tool for addressing the U.S. trade deficit, which lowers GDP and grows U.S. debt. 

The Case for a Global Tariff

The U.S. trade deficit is the result of importing far more than we export. Instead of trading goods for goods, the United States pays for our imports by selling off our assets, including corporate equity, real estate, and Treasury debt. The trade deficit is driven higher by the unfair trade practices of U.S. trading partners, U.S. leaders’ historic failure to respond, and an insatiable global demand for the U.S. dollar, which prevents it from adjusting against foreign currencies in response to trade imbalances. 

Targeted tariffs are a useful tool for confronting unfair trade practices in particular countries, but a universal tariff, or similarly broad policy,¹Alternatively, policymakers could pursue a market access charge to close the U.S. trade deficit. Rather than being levied on imports, a market access charge would apply to incoming foreign capital flows starting at a rate of 50 basis points and adjusting upward until balance is achieved. This would also encourage foreign nations to purchase American goods rather than U.S. financial assets like stocks and bonds. Another option would be creating a system of import certificates, where U.S. net importers would be required to purchase certificates from U.S. net exporters. The market price of these certificates would come down as trade comes into balance. is likely needed to promote domestic reindustrialization. For instance, when the United States put tariffs on $300 billion of Chinese goods under Section 301 of the Trade Act of 1974 in 2018, imports from China fell precipitously and in proportion to the timing and level of tariffs on particular categories of goods. But production mostly shifted from China to other countries, not back to the United States, meaningfully reducing U.S. dependence on an adversary but not the U.S. trade deficit with the world.  

Congress should implement a 10% global tariff that rises and falls with the U.S. trade deficit, as recommended by President Trump and former U.S. Trade Representative Robert Lighthizer. One such proposal is the BUILT USA Act, sponsored by Rep. Jared Golden (D-ME).