Trump’s Tariffs Will Reduce Deficits by $4 Trillion Over Next Decade, Says CBO Report

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The CBO also noted that revenues often lag several months behind the implementation of tariff policies.

A report released on Friday by the Congressional Budget Office (CBO) predicted that President Donald Trump’s tariffs will reduce federal deficits by around $4 trillion over the next decade.

If Trump’s global tariff hikes continue, increased revenue could shrink primary deficits by $3.3 trillion and cut federal interest payments by $0.7 trillion over the next decade, the CBO said. The current top tariff rates may not hold as negotiations with trading partners and international legal challenges are ongoing.

“We estimate that the effective tariff rate for goods imported into the United States has increased by about 18 percentage points when measured against 2024 trade flows,” the budget office said in its report, adding that Trump’s tariffs would reduce “the need for federal borrowing.”

The CBO also said it “projects further increases in tariff revenues in the coming months” and that “if there are no further changes in tariff rates, we project that customs duties from new and existing tariffs will total about $200 billion this fiscal year.”

But the office cautioned that revenues often lag several months behind the implementation of tariff policies, noting that once the rates are in effect, they don’t get applied to goods that are already in transit to the United States.

“In addition, importers have the option to delay payments by up to six weeks by participating in Customs and Border Protection’s Periodic Monthly Statement program,” added the CBO, which is a federal agency within the legislative branch that provides budget and economic information to both houses of Congress.

In July, Congress passed the GOP-backed One Big Beautiful Bill Act that contained several major Trump priorities on energy, the border, spending, and tax cuts. The CBO has said that it would add around $3.4 trillion to the national deficit over the coming decade, although the White House has disputed those figures.

The Trump administration has also said that the tariffs and policies initiated under the One Big Beautiful Bill Act, which Trump backed and signed into law, would bring forth economic growth over the coming years that would offset any additions to the national deficit.

By Jack Phillips

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