Trump Floats Plan to Slash or Eliminate Income Taxes Using Tariff Cash

President Donald Trump doubled down Sunday on his plan to use tariff revenue to slash - and possibly eliminate - income taxes for millions of Americans.

The former president took to Truth Social to tout his vision, claiming that his sweeping tariffs could lead to big tax breaks for workers making under $200,000 a year.

“When Tariffs cut in, many people’s Income Taxes will be substantially reduced, maybe even completely eliminated. Focus will be on people making less than $200,000 a year,” Trump wrote.

The bold pledge comes as public anxiety grows over the economic fallout from Trump’s aggressive trade policies, which have rattled global markets and fueled fears of higher prices at home.

In the weeks since Trump slapped so-called reciprocal tariffs on dozens of countries - including a staggering 145% levy on Chinese goods, economists have sounded the alarm that the tariffs could backfire, hurting American consumers more than foreign rivals.

That said - not everyone's excited after Trump told TIME Magazine in the April 25 edition that he “love[s] the concept” of raising taxes on millionaires as a means of paying for an extension of the 2017 tax cuts.

“I certainly don’t mind having a tax increase,” Trump told TIME.

“I would be honored to pay more, but I don’t want to be in a position where we lose an election because I was generous, but me, as a rich person, would not mind paying and you know, we’re talking about very little.”

He said it would involve raising taxes on the wealthy to “take care of [the] middle class.”

“But I don’t want it to be used against me politically, because I’ve seen people lose elections for less, especially with the fake news.”

Former White House strategist Steve Bannon told News Nation’s “CUOMO” on Friday that he supported the idea.

“This is being fought behind closed doors right now, and I’m telling you, with the massive tax cut, in addition, he’s going to give the working class and the middle class, the math only works out if you actually increase taxes on the wealthy,” Bannon said.

The former White House strategist said it could help Trump politically if he decided to run again in 2028, despite the Constitution preventing a third term in the Oval Office.

However, on April 23, the day after he sat down with TIME, Trump told reporters at the White House that raising taxes on the wealthy could be “very disruptive” and could lead to a loss of money for the United States.

House Speaker Mike Johnson dismissed the idea in an interview with Fox News.

“I’m not in favor of raising the tax rates because our party is the party that stands against that,” Johnson said on April 23.

He acknowledged that the proposal had been discussed as one of many possible ways to permanently implement personal income tax cuts in the Republicans’ final funding package.

“There were lots of ideas thrown out on the table along this process over the last year, but I would just say for everybody, just wait and see,” Johnson said.

A CBS News poll released Sunday found 69% of Americans believe the Trump administration isn't focused enough on lowering prices. Approval of Trump’s handling of the economy dropped to 42%, down from 51% in early March, Bloomberg reports.

Still, Trump’s team insists their strategy will pay off - eventually.

Treasury Secretary Scott Bessent, appearing on ABC’s “This Week,” defended the president’s approach, saying consumers are still spending and talks are underway with 17 key trading partners to hammer out bilateral deals.

“We have a process in place, over the next 90 days, to negotiate with them,” Bessent said. “Some of those are moving along very well, especially with the Asian countries.”

Bessent also insisted China would have no choice but to return to the negotiating table under pressure from Trump’s new tariff wall.

“Their business model is predicated on selling cheap, subsidized goods to the US,” Bessent said. “And if there’s a sudden stop in that, they will have a sudden stop in the economy, so they will negotiate.”

Bessent also explained America's "barbell" economy - in which there is a "financial system and tech sector that is the envy of the world" on one hand, and "a natural resource-economy led by energy" on the other end.

Trump has claimed that talks with China are ongoing - a claim Beijing has flatly denied. Bessent admitted he didn’t know if Trump and Chinese President Xi Jinping had spoken directly, noting that Chinese officials he saw during a global finance summit last week stuck to safer topics like “financial stability” and “early warnings.”

Despite the rocky start, Bessent said he’s optimistic that a path forward could emerge, starting with a “de-escalation” and leading to an “agreement in principle” - even if a full trade deal takes longer.

Meanwhile, Trump is eyeing sweeping tax changes at home. His 2017 tax cuts are set to expire at the end of 2025, and he has vowed to not only extend them but expand them, exempting workers’ tips, slashing the corporate tax rate to 15%, and possibly wiping out income taxes for working-class Americans.

The House GOP's early-April framework allows for up to $5.3 trillion in tax cuts over the next decade. Trade adviser Peter Navarro has suggested tariff revenue could more than cover that - a claim most economists dismiss as wildly optimistic.

Reports already show that Trump’s tariffs are expected to hit lower-income Americans harder than the wealthy, potentially complicating the president’s pitch to working families.

But Trump, undeterred, appears ready to bet that tariff-fueled tax cuts will give him a powerful message heading into the 2026 midterms, even if voters are feeling the pinch now.