In the last nine months, the Trump administration has rolled out substantial new tariffs on imports from various regions. Key products affected include steel, aluminum, and soon, semiconductors, pharmaceuticals, and furniture, with additional tariffs set to begin next month.
These measures have caused unrest in trade relationships, disrupted supply networks, and raised costs for both U.S. businesses and consumers. Essentially, these tariffs act like tax hikes for businesses and households. According to estimates from Yale University’s Budget Institute, the tariffs set for 2025 could raise prices by 1.7% in the near future, leading to an average loss of $2,400 in income per household by year’s end.
The revenue generated from these tariffs was intended to be used in a thoughtful and strategic way. To put this in perspective, prior to the tariffs of 2025, the average effective tariff rate in the United States stood at 2.4%. By late September, however, projections indicate that this rate will have surged to 17.9%, marking the highest level since 1934.
In September alone, the U.S. government brought in $31.3 billion in tariff revenue, pushing the yearly total to $214.9 billion. For some context, the U.S. previously gathered $77 billion in customs revenue, signifying a notable increase in income from these tariffs.
Even if the administration faces setbacks in a Supreme Court case regarding the International Emergency Economic Powers Act—related to these so-called “national emergency” tariffs—new trade cases are already on the agenda, likely resulting in further tariffs.
This is happening at a precarious time, as unemployment is gradually rising, influenced not only by the tariffs but also by the broader effects of automation and technology on the workforce.
The administration has suggested various uses for the tariff revenue, from aiding farmers affected by retaliation to addressing a fraction of the $3.5 trillion budget deficit created by the recently enacted Big Beautiful Act.
A more purposeful strategy would involve using this revenue to bolster American workers by enhancing the workforce’s skills. Currently, there exists a gap between available jobs and the skilled labor needed to fill them. For instance, as of July 2025, manufacturing jobs numbered around 437,000, but an estimated 2.4 million could vanish by 2028 due to technological advancements like AI and robotics, which are likely to create further job market disruptions.
Congress and the administration ought to prioritize investing this substantial tariff revenue into innovative training and apprenticeship initiatives geared toward preparing workers for upcoming economic shifts. Upskilling the workforce could boost America’s global competitiveness, lessen income inequality, and support the middle class.
Moreover, some of the tariff revenue should be allocated to revitalizing and expanding the Trade Adjustment Assistance Program, which was designed to support trade-affected workers but expired in 2022.
The American Leadership Initiative aims to craft policies that propel the U.S. economy and workforce forward into the 21st century. While the current tariff strategy may not advance this vision, the influx of tariff revenue presents a rare chance to enhance the future prospects of American workers.
Orit Frenkel, Ph.D.
