Charts Worth 1000 Words: Trump’s Tariffs Can’t Replace Taxes

From tariff delusions to gold buying sprees, these charts reveal the real stories behind headlines. Whether it’s Trump’s flawed tax logic, the surprising tax contributions of undocumented immigrants, the stock market’s uncanny reaction to presidential tweets, or China’s hunger for gold, each chart offers a sharp visual insight into today’s most pressing economic trends.

First, let’s examine Trump’s policies. Trump has long claimed that “reciprocal tariffs” could replace part of income taxes, supporting his broader tax cut plan. However, while the idea sounds promising, reality is far less so. Even if all the reciprocal tariffs announced on April 2 were fully implemented, the resulting revenue would fall far short of eliminating income taxes for households earning under \$200,000 annually. Trump promotes tariffs using 19th-century rhetoric, but back then the U.S. government was much smaller and its expenditures incomparable to today’s levels.

Moreover, countries have come to recognize that tariffs are merely a bargaining tool for Trump. Once deals are reached, tariffs are very likely to be significantly reduced. In addition, China’s tough countermeasures have provided other countries with a “template” to follow.

Finally, the main burden of tariffs falls on American consumers, whereas income taxes tend to target higher-income groups. Replacing income taxes with tariffs would essentially be “robbing the poor to benefit the rich,” shifting the tax burden onto low- and middle-income households.

Trump has also taken a hardline stance on illegal immigration, ramping up deportation efforts. However, taxes paid by undocumented immigrants have become an important source of revenue for major U.S. cities. In 2024, undocumented immigrants contributed \$11.3 billion in taxes in western U.S. regions such as Los Angeles, San Francisco, and Seattle.

Following mutual compromises between China and the U.S., the current average tariff rate imposed by the U.S. on Chinese goods is 51%, while China’s average tariff rate on U.S. goods stands at 32.6%.

Federal Reserve research shows that tariffs may affect investment goods prices far more than consumer goods. If a 25% blanket tariff is fully passed on to finished products, the short-term price of investment goods is estimated to rise by about 9.5%, while consumer goods prices would increase by around 2.2%. This could significantly impact corporate investment decisions.

Now let’s look at the U.S. stock market. The chart below shows the timing of several Trump comments on the stock market. Observing the corresponding price movements, one could say his timing has been uncannily accurate, earning him the tongue-in-cheek title of “the best trading indicator” among many Wall Street analysts. Don’t bet against Trump? Maybe.

Since the start of the tariff drama, the S\&P 500 index initially plunged, but then surged at least 18% within just 25 trading days—a rare event in history. Looking back, there have only been six such instances. After the previous five times the S\&P 500 jumped 18% in 25 days, the average return over the next year was 30%, with the lowest return at 11.4% and the highest at 43.65%.

However, warning signs for U.S. corporate earnings have begun to flash. The forward 12-month EPS (earnings per share) estimate for S\&P 500 companies has essentially flatlined since February 2025, and even started to decline in April.

Finally, let’s check out some other types of charts:

According to the Dallas Fed’s May banking sector survey, overall business activity deteriorated to -16.9 over the past six weeks—the weakest level since October 2024. Loan volumes declined across multiple categories. Data was collected from May 6 to May 14.

Despite gold prices hovering near historical highs, China’s central bank continues strong gold purchases. In April, China imported 127.5 tons of gold, a 73% month-on-month increase and the highest level in nearly a year.

Over the past 20 years, the top 100 U.S. companies have significantly reduced the proportion of pension assets allocated to equities—from 60% in 2005 to around 25% now. Meanwhile, allocations to fixed-income assets (such as bonds) have risen from 25% to 50%, reflecting a shift toward conservatism amid an uncertain environment.