The Congressional Budget Office (CBO) has released updated projections showing that tariffs implemented under President Donald Trump are expected to reduce federal deficits by $4 trillion over the next decade, a figure that far exceeds earlier estimates.
According to the CBO report issued August 19, the effective tariff rate for goods imported into the United States has risen by about 18 percentage points when measured against 2024 trade flows.
The agency projects that increases in tariffs between January 6, 2025, and August 19, 2025, will decrease primary deficits—those excluding net interest—by $3.3 trillion if the higher tariffs are sustained through 2035.
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The report further estimates that reductions in federal borrowing will lower government interest outlays by an additional $0.7 trillion, bringing the total projected deficit reduction to $4 trillion.
TRUST IN TRUMP! 🇺🇸💸
“The Congressional Budget Office projected that President Donald Trump’s tariff agenda, if maintained, would decrease total deficits by up to $4 trillion over the next decade.” pic.twitter.com/OwrUK4zIEU
— The White House (@WhiteHouse) August 23, 2025
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The new projection comes two months after the CBO released a June forecast predicting a $3 trillion reduction in deficits tied to tariff increases through May 13.
The updated numbers reflect trade actions taken between mid-May and August, representing nearly $1 trillion more in expected deficit reduction than previously estimated.
The CBO cautioned that its forecasts assume the tariff measures remain in place through the projection period.
It also noted that the estimates do not incorporate several tariff adjustments announced after August 19, including new European Union tariff arrangements scheduled for August 21, a 25 percent tariff hike on imports from India beginning August 27, and the suspension of duty-free shipments under $800 set to take effect August 29.
President Trump highlighted the report on his Truth Social account Friday.
“I am pleased to announce that the Radical Left Representatives working at the Congressional Budget Office (CBO) have now admitted how incredible my Tariff strategy has been, saying that, ‘Trump’s Tariffs reduce the deficit by $4 Trillion Dollars,’” Trump wrote.
“When I began my Tariff policy suggestions, they refused to acknowledge the potential SUCCESS that would be derived. Deficits are DOWN, Taxes are DOWN, Energy is DOWN, Prices generally are DOWN, the only things that are UP are, Take Home Pay, the Stock Market, and our Country, which is the ‘HOTTEST’ anywhere in the World. Thank you for your attention to this matter!”
The report reinforces the scale of fiscal impact tied to recent U.S. trade policy. Tariffs have been applied across a wide range of imports since January, when President Trump was sworn into office for his second term.
The measures target multiple trading partners, including China, Canada, and India, while also restructuring agreements with the European Union.
While critics have long argued that higher tariffs would harm consumers and disrupt markets, the CBO’s findings underscore the revenue benefits to the federal government.
By reducing reliance on borrowing, the policy has generated measurable decreases in projected federal deficits, even before accounting for the most recent tariff adjustments.
The CBO’s projections provide a forward-looking estimate rather than an immediate budgetary outcome.
The actual fiscal impact will depend on the longevity of the tariffs, compliance among trading partners, and broader economic conditions over the coming decade.
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