Fact Check: Trump’s Assertion on Tariffs and U.S. Economic Status Lacks Evidence

The U.S. economy has reached heights far beyond the tariff-driven era Trump romanticizes, economists say.

President Donald Trump has repeatedly claimed that the United States was at its economic peak during the late 1800s and early 1900s because of high tariffs on imported goods. “The word tariff is my favorite word in the dictionary,” Trump declared at the Conservative Political Action Conference in February. “We were richest, the richest, relatively, from 1870 to 1913.”

This claim, which Trump has made on multiple occasions, distorts economic history and misrepresents the relationship between tariffs and prosperity, according to economic experts and historical data.

By virtually any economic measure, today’s American economy vastly outperforms that of the Gilded Age. Real gross domestic product per capita—a key indicator of economic prosperity—stands at $58,487 as of 2022, nearly six times higher than the $10,108 recorded in 1913 and more than 12 times the $4,803 figure from 1870, according to inflation-adjusted data from the Oxford University-based project Our World in Data.

Trump has even suggested that tariff revenue could potentially replace federal income tax. “You could wipe out your income tax. You could maybe not even have an income tax system when this thing works out,” he claimed at a February dinner with Republican governors, referring to his proposed tariff increases.

Economists dismiss this notion as mathematically impossible. Erica York, vice president of federal tax policy at the Tax Foundation, points out that in fiscal year 2023, the federal government collected $2.2 trillion from individual income taxes compared to just $80 billion from tariffs. To make up this enormous gap, the U.S. would need to impose a staggering 70% tariff on all imported goods—a move that would likely trigger a sharp decline in imports, further undermining the tariff revenue base.

“It is literally impossible for tariffs to fully replace income taxes,” conclude Kimberly Clausing and Maurice Obstfeld, senior fellows at the Peterson Institute for International Economics, who warn that such a policy shift would cause job losses, higher inflation, larger federal deficits, and potentially trigger a recession.

Trump’s narrative also overlooks the complex factors that drove American economic expansion in the post-Civil War era. Douglas Irwin, an economics professor at Dartmouth College who has extensively studied this period, notes that “tariffs were probably not a key factor” in the nation’s growth during that time.

“That tariffs coincided with rapid growth in the late nineteenth century does not imply a causal relationship,” Irwin wrote in a 2000 paper. Instead, economic historians attribute the growth more significantly to increased labor productivity, immigration, technological advancement, and capital accumulation.

Scott Lincicome, vice president at the Cato Institute, reinforces this view: “U.S. tariffs imposed after the Civil War likely helped some American manufacturers and harmed others, but they were generally neither a major driver of nor drag on the sector’s and economy’s growth.”

While Trump has correctly noted that the federal government often ran budget surpluses during the 1870-1913 period, he fails to mention that these surpluses also occurred in later eras when tariffs represented a much smaller portion of federal revenue. Most recently, the U.S. experienced four consecutive budget surpluses between 1998 and 2001, when tariffs accounted for only about 1% of federal receipts.

Economists also warn that a shift toward tariff-based federal revenue would have regressive effects on American households. Unlike the progressive income tax, where higher-income households bear a proportionally larger burden, tariffs function as regressive taxes that impact lower-income households more severely as a percentage of their income. While U.S. importers technically pay tariffs, these costs are typically passed along to consumers through higher prices.

The economic reality remains clear: despite Trump’s nostalgic view of the tariff-dominant era, modern America’s economic prosperity far exceeds that of the Gilded Age, and the complex drivers of economic growth extend well beyond tariff policies.