Trump tariffs would slash deficit by $2.8T if kept in place for 10 years: CBO

The torrent of tariffs President Trump has enacted so far in his second term would slash the federal deficit by $2.8 trillion if kept in place through fiscal year 2034, the Congressional Budget Office has determined.But that suite of tariffs would also reduce the size of the US economy by about 0.06 percentage points per year on average and cause a 0.4% spike in total inflation for 2025 and 2026, the CBO noted.“In CBO’s assessment, the changes in tariffs will reduce the size of the U.S.economy—in part because of tariffs imposed by other countries in response to the increases in U.S.

tariffs,” the office told Senate Democrats in a Wednesday letter.“After accounting for that change in the size of the economy, CBO estimates that the changes in tariffs will reduce total federal deficits by $2.8 trillion.”Senate Minority Leader Chuck Schumer (D-NY), Sen.Jeff Merkley (D-Ore.) and Ron Wyden (D-Ore.) had sought the CBO’s assessment — known in Capitol Hill parlance as a “score” — of Trump’s tariffs.The CBO’s assessment looks at tariff increases via “executive action between January 6 and May 13” and does not take into account a recent trade court decision removing Trump’s tariffs that was later stayed by an appeals court.Tariffs the CBO evaluated include: a 10% baseline rate imposed on virtually every country, 30% duties on imports from China and Hong Kong, 25% tariffs on most automobile parts and on foreign-made automobiles, 25% on foreign steel and aluminum and the 25% rate on imports from Canada and Mexico that aren’t subject to the US States-Mexico-Canada Agreement.Trump is scheduled to speak with Chinese President Xi Jinping Friday after accusing China of flouting the terms of a tentative trade truce brokered in Geneva last month.The president’s team has also given countries a deadline of Wednesday to provide their best counteroffer on trade.

In April, Trump had given countries a 90-day extension — July 8 — to cut lightning de...