The non -partisan Congress Budget Office estimates that the tariffs of President Donald Trump would reduce the economy of the United States and add inflation while reducing the federal deficit by $ 2.8 billion.
In a letter published to the Senate Democrats, the CBO estimated the budgetary and economic effects of rates increases that were implemented through executive actions between January 6 and May 13. The analysis was completed before judicial decisions about tariffs and does not paint the complete image of the tariff policy in constant change of Trump.
The analysis includes a 30% rate on China and the 10% temporarily reduced reciprocal rates rate in most of the United States commercial partners who will expire in just over a month. It does not include the 50% duplicated rate rate on steel and aluminum that entered into force on Wednesday morning. The analysis does not include the commercial agreement with the United Kingdom because it is only an agreement in principle and not legally binding.
The analysis found that the reduction of the economy of the United States would vary, but said that tariffs would reduce the gross growth of the domestic product by a .06% each year, added that real GDP will be “0.6 percent lower” in a decade than the previous forecasts of CBO.
Trucks that transport containers are aligned in the port of NOBO-ZHOUSHAN in NOBO, China, on May 28, 2025.
Héctor Retamal/AFP through Getty Images
But the income that the United States government obtains tariffs would reduce total federal deficits by $ 2.8 billion. It is important to keep in mind that the money raised to pay the deficit is the income of the taxpayers paid by the tariffs of the imported goods.
“In the CBO evaluation, changes in tariffs will reduce the size of the United States economy, partly due to tariffs imposed by other countries in response to increases in US tariffs. After taking into account that change in the size of the economy, CBO estimates that changes in tariffs will reduce total federal deficits for $ 2.8 trillion,” said the letter.
“Reductions in investment and productivity derived from the highest rates will be partially compensated by increases in resources available for private investment resulting from the reduction of federal loans. CBO estimates that, in the net network (adjusted by inflation) in the United States it will fall as a result,” said the letter.
The letter also said that tariffs will increase inflation “by an annual average of 0.4 percentage points in 2025 and 2026, in the estimate of CBO, reducing the purchasing power of households and companies.”
He also said that tariffs will greatly increase inflation because “they will make consumer goods and capital goods (the physical assets that companies use to produce goods and services) are more expensive, which will reduce the purchasing power of US consumers and companies.”
The letter said the CBO added the impacts of “uncertainty derived from recent changes in tariffs.”
The letter responds to a request for information from the Classification Democrats on the Senate Budget and Finance Committees and Senate Democratic Leader Chuck Schumer.
