The Congressional Budget Office estimated that President Trump's tariffs will cut $4 trillion from the national deficit.
As of August 19, the CBO estimates 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 CBO projects that the tariffs enacted form Jan. 6 through Aug. 19 will drop the deficit by $3.3 trillion if the higher tariffs persist from 2025‒2035.
Those tariff collections will reduce the need for federal borrowing and will reduce federal outlays for interest by an additional $0.7 trillion.
The CBO says that tariffs will reduce the total deficit by $4 trillion because of recent increases in tariffs.
Because of recent changes in tariffs, those estimates are larger than the $2.5 trillion decrease in primary deficits and $0.5 trillion reduction in interest outlays that we projected in early June in a report that examined the effects of the tariffs implemented between January 6 and May 13, 2025.
Both estimates used the same methods, which are mainly based on data from the Census Bureau, Customs and Border Protection, and the Treasury.
Trump welcomed the report on Truth Social.
Since January, Trump has increased tariff rates for many goods, including these:
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- Imports from China and Hong Kong, by 30 percent of the value of the goods;
- Certain imports from Mexico, by 25 percent of the value of the goods;
- Certain imports from Canada, by 35 percent of the value of the goods;
- Certain imports from the European Union, so that the total tariff rate on those imports is equal to 15 percent of the value of the goods;
- Most imports from other countries, by at least 10 percent of the value of the goods, with imports from many countries facing higher increases beginning on August 7;
- Imports of automobiles and automobile parts, by up to 25 percent of the value of the goods;
- Most imports of steel and aluminum, by 50 percent of the value of the steel and aluminum in the goods; and Imports of copper products, by 50 percent of the value of the copper in the goods.
The analysis assumes that the tariffs will continue permanently without changes. This revenue projection doesn't include the changes in tariff rates announced on August 21 with the European Union, the scheduled August 27 increase in the tariff rate on imports from India by an additional 25 percent, or the August 29 suspension of duty-free entry for commercial shipments of less than $800.
The analysis reflects expiring tariff programs. Higher tariffs rates brought more revenue than projected in January.
Through July, the Treasury reports that duties have totaled $136 billion, with $28 billion collected in July alone.
If there are no further changes in tariff rates, the CBO project that customs duties from new and existing tariffs will total about $200 billion this fiscal year.
The CBO's next short-term forecast will publish on September 12. It will cover 2025 to 2028.
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