Recently, a bombshell piece of news has been circulating in financial circles—the US is planning a major tax reform.

The core idea can be summed up in one sentence: Stop paying personal income tax, and let the government rely on tariffs instead. Sounds crazy, right? But that’s exactly what’s being proposed, and it’s been repeatedly emphasized. The logic is this: sharply raise import tariffs and use that revenue to replace the $2 trillion in federal income tax, so people get their full paycheck with no deductions. It certainly sounds appealing.

But here’s the question—can this really work?

Supporters think this move could boost domestic manufacturing and directly increase household incomes. But if you do the math, it's not that simple: based on 2023 figures, to fill that gap, tariffs would have to soar to nearly 70%. What does that mean? Imported goods would instantly double in price, companies reliant on imported supply chains would be crushed, and trade wars would likely escalate.

More importantly, times have changed. Over a hundred years ago, tariffs could indeed support the government—back then, federal spending was only 2% of GDP. Now? It’s 22.7%. The scale is completely different. Using old methods to solve new problems, most experts aren’t optimistic.

But regardless, this proposal has already stirred up the market. Investors are reassessing policy risks, economists are debating its feasibility, and ordinary people are wondering how their wallets might be affected.

For macro-focused traders, what does this level of policy change mean? Capital flows will shift, commodity prices could move, risk aversion might rise… Even if it never materializes, the mere expectation is enough to make the market reprice. Now it’s all about how things progress from here, but one thing is certain: this debate won’t cool down anytime soon.