Topline
The Congressional Budget Office has lowered its estimate for U.S. fiscal savings from President Donald Trump’s tariff policy by $1 trillion, according to a report Thursday, which made multiple downward adjustments to expectations around the president’s tariffs.
Key Facts
Recent tariff changes will produce $3 trillion in total savings, the office said, down from the $4 trillion savings estimate it made in August.
The office projects an uptick in tariffs introduced from January to November will lower budget deficits by $2.5 trillion over the next 11 years, down from the $3.3 trillion projected in August.
The office also forecasts $500 billion in savings from lowered interest costs, due to less borrowing being necessary for the government thanks to tariff revenue, down $200 billion from August’s $700 billion savings estimate.
The office noted about “two-thirds of the downward revisions” are from adjustments made to reflect new data around tariffs, the details of which have changed throughout the year.
The largest tariff policy changes identified by the office included new tariffs on goods from India, a reduction on tariffs against Chinese goods, a reduction on tariff rates for some goods from Japan and the European Union and the introduction of product-specific tariffs on things like vehicles, vehicle parts and certain lumber.
The estimates do not account for the economic impact created by Trump’s tariff policies.
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Crucial Quote
“Moreover, the United States has not implemented increases in tariffs of this size in many decades, so there is little empirical evidence to guide our estimates of their long-term effects,” the office said in its report. “Consumers and businesses could be more or less responsive to increases in tariffs of this size, which would cause trade and revenues to diverge from projected amounts.”
