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Trump’s growing focus on tariff revenue raises trade war odds

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1 year ago

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President Donald Trump and his economic team are increasingly focusing on the revenues his tariffs would generate as he seeks to get tax cuts through Congress, pointing to an ominous path ahead for countries trying to avoid a trade war.

Trump needs as much revenue as he can get as Republicans in Congress are working to iron out a plan to extend the 2017 tax cuts that are due to expire later this year, along with additional cuts, at an overall cost of $4.5 trillion over the next 10 years.

The White House has touted using tariffs for everything from reducing trade imbalances to increasing leverage over countries to hammer out deals. Economists question Trump’s logic, warning that tariffs will lead to slower growth and thus declining government revenues while also prompting retaliation from other nations.

But comments by Trump and his top economic advisors on Thursday showcased their growing emphasis on using tariffs as an income generator for the government.

In a social media post, Trump pointed to “lots of money coming in from tariffs” as a way to help balance the federal budget, which is projected to have a roughly $2 trillion deficit this fiscal year. That followed the president’s declaration Wednesday evening that the government would be taking in “tremendous tariff money.”

Another part of the revenue answer, according to the Trump administration, is spending cuts being identified by Elon Musk and his Department of Government Efficiency, which so far claims to have found some $55 billion in savings, although questions have been raised about that total.

Increasingly, though, the White House is talking up the lengthening list of tariffs that Trump has rolled out or threatened.

Speaking to reporters on Thursday, Kevin Hassett, head of Trump’s National Economic Council, said a 10% levy on imports from China introduced earlier this month would generate “between $500 billion and a trillion dollars over 10 years.”

Separately, Commerce Secretary Howard Lutnick told Fox Business that an order by Trump to impose “reciprocal” tariffs aimed at other economies’ tax and regulatory barriers alone could “earn us $700 billion a year.” Trump’s trade czar added those funds would help eliminate the budget deficit and cause interest rates to “come smashing down” with the result being that “the whole economy explodes higher.” 

Tariff throwback

The U.S. depended on tariffs as the major source of government revenues through the 19th century, which Trump has pointed to as inspiration for his belief in the revenue-generating powers of import duties. 

But the federal government was much smaller then and everything changed with the introduction of an income tax in 1913. Since the Second World War, tariffs have never generated much more than 2% of total federal revenue, according to a Congressional Research Service report published in January.

The U.S. imported $3.3 trillion in goods last year, according to official data, and are currently subject to an applied average of around 3%. In order to raise the $700 billion Lutnick projected, new tariffs would have to rise significantly.

If maximizing revenues was the goal, a U.S. tariff rate approaching 50% would be optimal and result in $780 billion in revenues, economists at the Peterson Institute for International Economics calculated last year. But that figure would go down over time as trade patterns shifted and the economy slowed, wrote economists Kim Clausing and Maurice Obstfeld. 

Pursuing that as policy in the longer term “would actually lose revenue because of the contractionary consequences of such high tariffs,” the economists said. 

Since the 1930s, U.S. trade policy has mostly focused on lowering tariffs in order to convince other countries to do the same, while opening up new markets for U.S. goods.

Trump and his supporters argue that hasn’t worked and point to China’s rise as the world’s manufacturing superpower as evidence.

“It’s a huge departure” from decades of U.S. trade policy and one that could lead to higher prices and slower growth, said Mary Lovely, another economist at the Peterson Institute.

It could also backfire politically, she said. President William McKinley ultimately changed his mind on tariffs after what amounted to a working-class revolt against higher prices. That episode set the stage for the shift to income taxes.

Trump and his aides are pitching the tariffs as a tax paid by other countries. But studies show they are typically paid by U.S. importers with the cost often passed on to consumers. 

In the wake of the 2024 election in which inflation was a big driver of Trump’s victory, “those reasons to not like a tariff still exist very much,” Lovely said.

Fiscal priority

Republicans in Congress are receptive to the idea of higher tariff revenues in the short term, even if there are questions about how they can factor them into their accounting under the rules they have to abide by to expedite passage of a tax bill. 

“When you care about the fiscal health of the nation as a whole, you have to look at the possible influx of future revenues that could come from the president’s trade proposals,” Representative Jason Smith, chairman of the influential Ways and Means Committee told Bloomberg Television in February.

That domestic priority is likely to compete with any plans Trump may have to also use tariffs as a tool for economic diplomacy.

Focusing on revenues could also create an entirely new dynamic for U.S. trade officials used to zeroing in on lowering trade barriers rather than generating income, said Daniel Mullaney, a former top U.S. trade negotiator now at the Atlantic Council think-tank. Though that is how many developing countries like India have historically approached negotiations, he said. 

“That’s the new part,” Mullaney said. “Now we are considering the tariffs and lowering tariffs as revenue foregone and raising tariffs as revenue coming in.”

If raising revenues is Trump’s real tariff priority, it would make it very hard for the European Union and U.S. to avoid an escalating trade war in the months to come, said Ignacio Garcia Bercero, a former EU trade negotiator, now at think-tank Bruegel.

“That’s not good from the European perspective,” he said. “It’s clear that all of this suggests that there is not really much that you can actually negotiate.”

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AI-Driven Automation and Continuous Accounting Frameworks

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5 days ago

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August 15, 2026

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The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

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Accounting

Global ESG Reporting Standards and Double Materiality Compliance

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2 weeks ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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2 weeks ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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