Trump Administration Tariff Revenue Declines as Low Inflation Boosts Stock Market Sentiment

BlockBeats News, January 6th, the latest data shows that US inflation pressure is significantly lower than market expectations. The latest CPI announced by the US Bureau of Labor Statistics is 2.7%, significantly lower than Wall Street's previous consensus forecast of 3.1%, catching the market off guard.

Since Trump announced the "Liberation Day" tariffs in April last year, the market has generally expected tariffs to increase inflation. However, two recent studies by the San Francisco Fed pointed out that historical experience shows that tariffs have not triggered a large-scale inflation surge. This is because importers have been able to transfer their supply chains, circumvent tariffs, negotiate exemptions with various countries, and significantly dilute the effective tax rate. The studies believe that the negative impact of tariffs on economic growth and employment is more pronounced, but the magnitude of the inflationary effect is much lower than expected.

A report from Pantheon Macroeconomics shows that US tariff revenue has started to decline:

· October peak: $34.2 billion
· November: $32.9 billion
· December: $30.2 billion

Analysts point out that the current average effective tariff rate in the US is about 12%. According to institutions, the impact of tariffs on Personal Consumption Expenditures (PCE) inflation is about 0.9 percentage points, with 0.4 percentage points already digested by the market. The main inflationary shock may have passed, and core PCE is expected to approach the 2% target within the year.

The lower-than-expected tariff revenue has also weakened the US government's fiscal space. Treasury Secretary Bessemer previously expected tariffs to generate $500 billion to nearly $1 trillion in revenue, but calculations by independent institutions show that tariff revenue in 2025 may only be $261 billion to $288 billion. Currently, the US fiscal year 2026 has accumulated a deficit of $439 billion, and the total national debt exceeds $38.5 trillion. With declining tariff revenue, the sustainability of Trump's proposed "Trump Account" and universal cash subsidy plan faces challenges.