Did trump sigh anything recently that going to shut down the irs an replace it with tariffs

1. Big Claim, Bigger Numbers: What supporters say and how they frame it

Supporters in the administration describe an ambition to “abolish” the Internal Revenue Service and substitute tariff revenue administered by a new agency—sometimes called an “External Revenue Service”—arguing tariffs could raise hundreds of billions and eventually supplant income taxes. Howard Lutnick and other allies have promoted the concept as a politically bold path to eliminating income taxes while generating revenue via trade measures, framing tariffs as a way to shift the tax burden to foreign producers and simplify collections. This framing relies on large, immediate tariff receipts as an alternate funding stream and positions tariffs as a politically attractive replacement to domestic income taxation ^{[4] [3]}.

2. The arithmetic problem: Why economists call the plan implausible

Multiple independent analyses demonstrate a stark arithmetic mismatch: replacing approximately $3 trillion in income-tax revenue would require tariff rates far above current levels—analysts calculate tariffs of at least 100% or more on imports to even approach that scale, which is economically unrealistic. Models from academic and policy groups show tariffs are a much smaller tax base because they apply only to imports and because higher rates compress import volumes. Estimates of feasible tariff revenue vary widely—some administration supporters propose hundreds of billions, while mainstream economists and organizations project only tens to a few hundred billion—leaving a multi‑trillion dollar shortfall ^{[5] [6] [2]}.

3. How higher tariffs would ripple through prices, demand and production

Evidence from recent studies and tariff episodes shows tariffs are largely borne by U.S. consumers and businesses through higher prices, with price increases documented in the 10–30% range for goods subject to tariffs. Elevated tariffs would shrink consumption of imported goods, incentivize reshoring in some sectors, and reduce the taxable import base—an outcome that paradoxically reduces tariff revenue if rates climb too far. Models also project that low- and middle‑income households would be disproportionately harmed, potentially seeing declines in after‑tax income and real purchasing power, meaning the policy would likely be regressive even if it eliminated income taxes ^{[5] [4]}.

4. Fiscal, legal and institutional roadblocks the proposal ignores

Eliminating the IRS and income taxes would require major legislative action by Congress and would pose substantial fiscal risks if tariff revenue falls short. Former tax administrators and budget analysts warn that replacing a broad-based, stable income-tax system with a narrow import tax risks large deficits unless additional consumption or other taxes are implemented. Several analyses point out existing tariffs and scheduled increases still fall far short of income-tax receipts, and that a transition would likely create administrative and economic dislocations while failing to deliver predictable revenue ^{[3] [2]}.

5. Divergent revenue estimates and suggested compromises from analysts

Proposals within the administration produce optimistic revenue figures—some advisors have suggested up to hundreds of billions—while independent estimates, including those from tax policy centers, arrive at much lower numbers, typically in the low hundreds of billions or less. To bridge gaps, some analysts suggest a hybrid: higher but realistic tariffs combined with a consumption tax or smaller income-tax base adjustments. These compromise scenarios accept that tariffs alone cannot shoulder the federal revenue burden, and that any credible plan would require explicit multi‑source revenue streams and transitional safeguards to protect low-income households ^{[6] [5]}.

6. The political landscape and what to watch next

Political feasibility remains uncertain: the administration can propose tariff-first strategies, but Congress controls tax law and appropriations, and public backlash to higher consumer prices could make large tariff hikes unpopular. Watch for concrete legislative proposals, revenue estimates from nonpartisan agencies, and any signaling from Republicans and Democrats in Congress about willingness to trade off income-tax repeal for tariffs. Until rigorous, peer-reviewed revenue estimates and statutory language appear, the claim that tariffs will replace the IRS remains an unproven political assertion rather than a practicable fiscal plan ^{[1] [3]}.