Trump’s Tariffs Could Reduce U.S. Deficit By $4 Trillion, CBO Estimates

President Donald Trump’s aggressive tariff policy could deliver a massive blow to the national deficit, according to a new report from the Congressional Budget Office (CBO). The nonpartisan watchdog estimates that if Trump’s current global tariff levels are maintained, the U.S. could see a $4 trillion reduction in its deficit over the next decade.

The CBO projected that $3.3 trillion of that reduction would come from new tariff revenue alone, with an additional $700 billion saved from reduced federal interest payments on debt.

The report marks a significant jump from the CBO’s June forecast, which projected only $3 trillion in combined deficit and interest payment reductions. The key driver behind the update: higher-than-expected average tariff rates, which rose to 16.7% in August—up from 15.1% just two months earlier, according to Oxford Economics.

Tariffs Counterbalance Spending Surge

Trump’s tariffs are now bringing in more than $26 billion in duties this fiscal year, far exceeding last year’s figures. That revenue could be pivotal in offsetting the $3.4 trillion in additional deficits triggered by this year’s Republican tax cuts and spending package.

The CBO’s findings come as Congress faces a September deadline to approve new government funding bills—or risk another shutdown. With the national debt topping $37 trillion, Trump’s tariff strategy could give Republicans ammunition to justify their broader economic plan without pushing austerity measures.

Policy in Motion, Legal Fights Loom

The CBO acknowledged that the long-term outlook may shift depending on ongoing trade negotiations and likely legal challenges from global trading partners. But for now, the tariffs appear to be accomplishing what Trump promised: shrinking the deficit, boosting U.S. revenue, and leveraging America’s consumer base as an economic weapon.

Whether the courts or foreign governments manage to derail the full impact of Trump’s tariff regime remains to be seen—but the CBO’s numbers speak for themselves. The tariffs are not just a trade tool; they’re quickly becoming a major fiscal weapon.