Trump's tariffs could reduce US deficit by $4 trillion, CBO estimates - Reuters

Trump's tariffs could reduce US deficit by $4 trillion, CBO estimates - Reuters

Washington (Reuters) - President Donald Trump's increased tariffs on U.S. imports from foreign countries could reduce the national deficit by $4 trillion over the next decade, according to the Congressional Budget Office (CBO).

If Trump's global tariff hikes continue, the additional tariff revenue could shrink primary deficits by $3.3 trillion and cut federal interest payments by $0.7 trillion over the next decade, the CBO estimated on Friday [1]. This marks an increase from June when the CBO forecast a $2.5 trillion reduction in primary deficits and a $500 billion cut in interest outlays.

The current top tariff rates may not hold as negotiations with trading partners and international legal challenges are ongoing. However, the additional tariff revenue could help offset the deficit increases triggered by the Republicans' tax-cut and spending bill passed this year, which CBO estimated would widen the deficit by $3.4 trillion over the next decade.

The U.S. federal debt stands at $37.18 trillion, according to the Treasury Department. The latest CBO estimate highlights the potential impact of Trump's tariffs on the federal deficit. Lawmakers face a government funding deadline at the end of September or risk a shutdown if spending bills are not passed.

The U.S. tariff rates across countries and products averaged 16.7% in August, up from 15.1% in June, according to Oxford Economics. More than $26 billion in duties have been assessed by U.S. Customs and Border Protection this fiscal year, far surpassing the hundreds of millions recorded in the previous year [2].

References:
[1] https://www.investing.com/news/economy-news/trumps-tariffs-could-reduce-us-deficitby-4-trillion-cbo-estimates-4207307
[2] https://fashionunited.uk/news/business/walmart-on-trump-tariffs-our-costs-are-rising-every-week/2025082283519