The Congressional Budget Office on Wednesday said that President Donald Trump’s tariffs will shrink the U.S. economy and increase inflation, but that they could reduce the deficit by as much as $3 trillion over 10 years.
The CBO estimated the increase in revenue collection from tariffs would reduce the deficit by $2.5 trillion from fiscal 2025 to fiscal 2035, measured against baseline projections made in January. The smaller deficits would deliver another $500 billion in savings on interest payments, it said, noting the estimates were before accounting for tariffs’ impact on the economy.
In a letter to Senate Minority Leader Charles E. Schumer, D-N.Y., Senate Budget ranking member Jeff Merkley, D-Ore., and Senate Finance ranking member Ron Wyden, D-Ore., the CBO looked at executive actions on tariffs from Jan. 6 through May 13.
