'Tariffs Will Replace Income Tax, Will Take Burden Off Americans': Trump In Key Speech

US President Donald Trump, in his State of the Union address, said that the tariffs paid by foreign countries will replace the modern-day system of income tax.

25 Feb 2026, 02:53 · NDTV

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US President Trump defended his tariffs, claiming foreign countries now pay billions to the US
He said tariffs could replace income tax, easing financial burdens on Americans
Trump criticised the Supreme Court ruling striking down earlier import duties as unfortunate

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US President Donald Trump, during his annual State of the Union address, defended his sweeping tariffs on foreign countries, saying those who "ripped the US for years are now paying billions of dollars". The Republican leader asserted that the tariffs will replace the modern-day system of income tax - a claim that he had made at the beginning of his second term. LIVE UPDATES

"As time goes by, I believe that tariffs, paid for by foreign countries, will, like in the past, substantially replace the modern-day system of income tax, taking a great financial burden off the people that I love," Trump said.

According to Trump, one of the primary reasons for the US' economic turnaround is tariffs. "I used these tariffs, took in hundreds of billions of dollars to make great deals for our country, both economically and on a national security basis. Everything was working well. Countries that were ripping us off for decades are now paying us hundreds of billions of dollars. They were ripping us so badly," he said.

"These countries are now happy, and so are we. We made deals. The deals are all done. And they're happy. They're not making money like they used to, but we're making a lot of money. There was no inflation, tremendous growth," he added.

Trump further slammed the US Supreme Court's ruling to strike down his earlier sweeping import duties, calling it "very unfortunate".

"Just four days ago, an unfortunate ruling from the United States Supreme Court. It just came down. It came down. Very unfortunate ruling. But the good news is that almost all countries and corporations want to keep the deal that they already made - knowing that the legal power that I, as President, have to make a new deal could be far worse for them. And therefore, they will continue to work along the same successful path that we had negotiated before the Supreme Court's unfortunate involvement," he said.

Trump also repeated his "solved wars claim", saying there was a "threat of tariffs" to the countries.

"Despite the disappointing ruling, these powerful countries saving - it's saving our country the kind of money we're taking in - peace-protecting many of the wars I settled was because of the threat of tariffs. I wouldn't have been able to settle them without - will remain in place under fully approved and tested alternative legal statutes. And they have been tested for a long time," he said.

'They're a little more complex, but they're actually probably better, leading to a solution that will be even stronger than before. Congressional action will not be necessary. It's already time-tested and approved. And as time goes by, I believe that tariffs will take a great financial burden off the people that I love," Trump added.

Barely six months after he returned to the White House, Trump demolished the old global economic order and used US' enormous economic power to punish countries that won't agree to one-sided trade deals and extract huge concessions from the ones that do. On April 2, the US President announced "reciprocal" taxes of up to 50 per cent on imports from countries with which the US ran trade deficits and 10 per cent "baseline" taxes on almost all other countries. He invoked a 1977 law to declare the trade deficit a national emergency that justified his sweeping import taxes.

As the announcement triggered a backlash, he suspended the reciprocal tariffs for 90 days to give countries a chance to negotiate. Eventually, some of them caved in to Trump's demands. The countries that did not cave in got hit harder with the tariffs.

However, US Supreme Court's recent 6-3 ruling handed Trump a stinging loss on an issue crucial to his economic agenda. Furious about the defeat, Trump signed a new 15 per cent tariff order on imports from around the world, hours after the top court setback. The new tariffs will come under a law that restricts them to 150 days, and will take effect "almost immediately".

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