The Blubber

ongressional budget analysts say President Trump’s tariffs could generate trillions in federal revenue over the next decade—more than enough to offset the additional deficit expected from a sweeping budget bill passed by the House last month.

During a visit to a U.S. Steel plant in West Mifflin, Pennsylvania, Trump announced plans to double tariffs on imported steel.

Since taking office, the president has imposed tariffs ranging from 10% to 50% on a wide range of imports. Those measures have already brought in tens of billions of dollars.

According to a letter released Wednesday by the non-partisan Congressional Budget Office (CBO), if the tariffs remain in place permanently, they could reduce the federal deficit by $2.8 trillion by 2035.

A separate CBO estimate released earlier the same day projects that the House-approved budget—which includes both tax cuts and spending increases—would widen the deficit by $2.4 trillion over the same time frame.

Key Assumptions and Uncertainties

The CBO’s projections come with significant caveats.

“Because the United States has implemented no increases in tariffs of this size in many decades, there is little relevant empirical evidence on their effects,” wrote CBO Director Phillip Swagel. The higher tariffs might reduce imports more than expected, cutting revenue. Alternatively, if imports hold steady despite the tariffs, federal revenues could rise even more.

While a federal court recently blocked parts of the administration’s sweeping tariff program, the White House has vowed to appeal. Many tariffs remain in effect and were imposed under a controversial interpretation of a 1977 trade law that continues to face legal scrutiny.

The forecast assumes that most tariffs in place as of mid-May will become permanent. It does not factor in the newly doubled tariffs on steel and aluminum, nor does it include any higher tariffs that have been temporarily paused but could be reinstated.

Economic Effects and Inflation Risks

CBO analysts also warn that while tariffs may help reduce the deficit, they are likely to fuel higher inflation in the short term and dampen economic growth.

Both high- and low-income households are expected to feel the impact of rising prices, though the CBO has not yet determined which income brackets would be hit hardest.