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It’s not nothing: At this pace, tariffs would raise receipts from corporate taxes by 39%, but would make only a dent into the huge US deficit.
By Wolf Richter for WOLF STREET.
Collections from customs and certain excise taxes spiked by $6.5 billion, or by 37.5%, in May from April, to $24.0 billion, nearly triple the average monthly collections in 2024 ($8.2 billion), according to the Treasury Department’s daily data today.
Over the past three months, they spiked by $15 billion, or by 168%.
This $24.0 billion is the amount in customs and excise taxes that the Department of Homeland Security – which includes Customs and Border Protection – transferred in May into Treasury Department’s checking account at the Fed, the Treasury General Account. This total of $24 billion includes a small amount in “certain excise taxes” (in April, $1.1 billion). The rest is from tariffs – so, roughly $23 billion in receipts from tariffs.
It’s not nothing: At May’s pace, these customs and excise taxes would amount to $288 billion per year, up by $190 billion from 2024.
Tariffs are taxes paid by businesses – some of the biggest of which pay little nor no income taxes in the US. Total corporate income tax receipts amounted to only $507 billion in 2024, or about 12.5% of the $4.1 trillion in pre-tax corporate profits, according to data from the Bureau of Economic Analysis.
And an additional $190 billion in tariffs per year would be an increase of 37% of the taxes paid by corporations.
Obviously, it’s not going to solve the $2-plus trillion US deficit, but it will make a little dent into it.
Profits at “nonfinancial” corporations alone – the companies more likely engaged in imports – reached $2.8 trillion in 2024, up by 120% from 2019.
This is where part of the inflation spike in 2021-2024 went, as companies took advantage of the consumers’ free-money-from-heaven benighted pay-whatever mentality at the time, and now there is plenty of room, huge amounts of room, to pay a measly $190 billion in additional tariffs without breaking a sweat.
But passing them on to consumers will be tougher because consumers have woken up, and they hate, hate, hate higher prices, and they have had it, and companies have had to cut many goods prices in 2023 and 2024 to prevent losing sales.
So this is not 2022 anymore. The free-money-from-heaven is gone, and price increases piss consumers off, and consumers said forget it when they encountered price increases, and shopped around for alternatives, because consumers paid for this historic spike in corporate profits:
To dodge those tariffs, countless big companies have announced plans to shift production to the US, from GM on down – which is the primary purpose of tariffs.
Some plans involve simply shifting production to existing US factories. Others involve investing in the expansion of existing factories. And other plans involve building entirely new factories. The first can be done relatively quickly; the latter takes years to accomplish.
All three of them are immensely valuable to the US economy through the investment, know-how, infrastructure, employment of factory workers and tech people, secondary and tertiary employment, tax receipts, etc. that manufacturing in the US generates.
And there is a very long way to go:
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The post Revenues from Tariffs Spiked to $23 Billion in May, up by 168% in 3 Months appeared first on Energy News Beat.
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