President Donald Trump has shared an ambitious idea to remove federal income taxes and replace them with a tariff-based system, inspired by how America operated from 1870 to 1913.

He suggests the creation of a new agency, the External Revenue Service (ERS), to manage tariffs and foreign income, aiming to ease the tax load on Americans.

Trump’s Vision for a Tariff-Based Economy
During the 2025 Republican Issues Conference held at Trump National Doral Miami on January 27, Trump detailed his economic plan in front of GOP leaders. This three-day event aimed to shape the legislative priorities of the party.

In his address, Trump noted the historical success of America before 1913, a period when the nation flourished based on tariffs instead of income tax. He described this era as remarkably prosperous for the country.

“From 1870 to 1913, the U.S. ran on tariffs—that was the richest period in American history, relatively speaking,” he stated. He mentioned the Tariff Commission of 1887, tasked with managing the massive money generated through tariffs.

“The amount was so significant that they didn’t know what to do with it all. Teddy Roosevelt managed to fund national parks and other projects—all through tariffs. Income tax only started in 1913,” Trump explained.

‘Tax Foreign Nations, Not Our Citizens’
Trump’s argument is simple: instead of taxing American citizens for the benefit of foreign nations, America should impose tariffs on other countries to enhance its own wealth. He believes that a shift to tariffs can swiftly make America “very rich again.”

Throughout his campaign, Trump has consistently advocated for replacing income taxes with tariffs.

Could the U.S. Replace Income Tax with Tariffs?
Typically, tariffs are a percentage levy on imported goods, collected by U.S. Customs and Border Protection at entry points. Many economists have voiced skepticism, stating that tariffs are inefficient for funding government programs and could increase consumer costs.