The Congressional Budget Office (CBO) has updated its forecast on how much President Donald Trump’s tariffs will reduce the U.S. deficit.
The new estimate shows a total deficit reduction of $3 trillion through 2035, which is $1 trillion lower than its previous projection.
Why Did the Estimate Change?
The CBO lowered its numbers mainly because the administration adjusted tariff rates and rolled back some duties with major trading partners. Updated economic data also contributed to the revision.
How Much Will Deficits Be Reduced?
- Total deficit reduction: $3 trillion (2025–2035)
- Earlier estimate: $4 trillion
Detailed Breakdown
- $2.5 trillion from lower primary deficits (previously $3.3 trillion)
- $500 billion from lower interest costs (previously $700 billion)
What Does This Mean?
The revised numbers show that tariff revenues will still bring a significant reduction in the federal deficit,
but less than the CBO initially expected. Policy adjustments and changing trade conditions played a major role in lowering the impact.
Key Questions Answered
1. How much will Trump’s tariffs reduce the deficit?
The CBO now estimates a $3 trillion reduction through 2035.
2. Why is the estimate $1 trillion lower?
Because the administration reduced or adjusted some tariff rates and new economic data changed the calculations.
3. What portion comes from lower interest costs?
$500 billion in savings, $200 billion less than earlier estimates.
4. Are tariffs still expected to reduce deficits overall?
Yes, but the impact is smaller than earlier projections.
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