America Can Afford Higher Taxes. The Tariffs Prove It

If the Trump administration’s misguided tariff policy has proved anything, it’s that corporate America can afford to pay higher tax rates without the disruptions that Republican devotees of supply-side economics always say are inevitable. This is an important lesson as the warnings over the country’s elevated debt and federal budget deficits become more dire.

For supply siders, higher taxes are like kryptonite to an economy, discouraging businesses from investing and damping entrepreneurial activity. And yet, the economy has proven remarkably resilient despite the tariffs, which are similar to a tax on businesses and consumers. The duties — paid by importers and either absorbed by them or passed on to customers — brought the US Treasury around $29.5 billion a month in extra revenue over the second half of 2025. Even so, the median estimate of economists surveyed by Bloomberg for 2025 gross domestic product rose, from around 1.35% in the wake of the “Liberation Day” tariff announcement in April to the current 2.2%.