Former U.S. President Donald Trump has proposed replacing the income tax with significant tariffs, which may lead to changes in federal tax policy and international trade.
Trump's New Tax Policy
Donald Trump has introduced a new idea regarding tax policy, suggesting that the income tax should be replaced with substantial tariffs. This move could substantially change the country’s economic policy and affect global trading relations. Support for this idea comes from U.S. Secretary of Commerce Howard Lutnick, who acknowledges that eliminating the income tax completely may not be feasible.
Economic Implications of the Proposal
Economic commentators have begun analyzing Trump's proposal and its potential impacts on trade relations and tax revenues. It is expected that replacing the income tax with tariffs would result in insufficient budget revenue, as projections indicate that tariff revenues would not adequately replace all federal taxes. The International Monetary Fund forecasts negative economic growth in the U.S. in 2025 due to potential tariffs.
Crypto Market Adapts to Tariff Changes
The Coincu research team notes that macroeconomic policy changes, such as tariffs, often significantly impact global financial markets. During previous tariff escalations from 2018 to 2020, equity markets experienced increased volatility, and investors sought safe assets. Bitcoin (BTC) and Ethereum (ETH) are seen as hedges against financial instability among cryptocurrency users.
Trump's proposal to replace the income tax with tariffs opens up a discussion on potential changes in economic policy and their implications for the global market.
