At a recent investment summit in Miami, President Trump announced that his administration is “trying to balance the budget immediately” with the help of revenue from tariffs, extra sales taxes on stuff from other countries. The President wagered, “we have a chance at getting it even this year.” 

Commerce Secretary Howard Lutnick doubled down on that promise in a recent appearance on the All-In podcast, saying that DOGE cuts and extra tariff revenue will balance the budget.  

The last time Washington balanced the budget – took in more money than it spent – was 2001. The federal government has run a deficit each year since then, leading to $36 trillion in debt. 

How much money would it take to balance the budget this year? $1.8 trillion 

The Congressional Budget Office (CBO) predicts the government will bring in $5.2 trillion in taxes this year, with 95 percent of that coming from individual income, payroll, and corporate taxes. At the same time, CBO expects the government to spend just over $7 trillion this year, leading to a deficit of $1.8 trillion. 

It would take a lot of tariffs to bridge the gap. In 2024, for comparison, the federal government collected just $77 billion in tariffs, just 4 percent of total tax revenue.  

How much did Americans spend on imported goods last year? $3.3 trillion 

But the government can’t just collect that full amount as tariff revenue. Part of the appeal of tariffs, according to their supporters, is that consumers will choose to buy American-made products instead of imported goods. So the amount we spend on imports would go down. 

Second, not all imports are subject to tariffs. Most imported products are “duty free” and pay no tariffs. During President Trump’s first term, only about one third of foreign goods paid a tariff. 

So, of the $3.3 trillion Americans spend on imports, only about one third is subject to tariffs – $1.09 trillion.  

Based on that number, if President Trump returned America to its peak tariff rates (59 percent of dutiable imports) and people didn’t change their spending habits, that would result in an extra $643 billion in revenue this year – about a third of the deficit. 

To be clear, President Trump has not suggested America return to 59 percent tariffs. During the 2024 campaign, he floated the idea of 10 or 20 percent tariff rate. Based on last year’s imports, that would raise anywhere from $109 to $218 billion in revenue, if consumers don’t change their spending habits. 

But tariffs don’t have to get us all the way to $1.8 trillion. Secretary Lutnick said tariffs would be combined with spending cuts to balance the budget.  

Elon Musk, the leader of the Department of Government Efficiency (DOGE), says his task force will cut $1 trillion in spending this year. But recent investigations call some of DOGE’s purported savings into question, finding them to be unverifiable, exaggerated, or erroneous. 

With all that in mind, here is what it would it take to balance the budget this year:  

  1. DOGE would have to cut every single dollar it promised to, with no room for error,

  2. President Trump would have to return America to historically high tariff rates,

  3. Congress would have to find a couple hundred billion dollars in other savings, and 

  4. Americans would have to not change their spending habits.