Trump tariffs to cut US deficit — Congressional Budget Office

The US administration's import tariffs on key trading partners, which took effect in mid-May, will help reduce the country's budget deficit by approximately $2.8 trillion, according to the American Congressional Budget Office.

Officials stated that the imposition of duties will help lower budget deficits by $2.5 trillion by 2035. An additional $500 billion in deficit reduction is expected due to a decrease in federal borrowing. However, these estimates may be subject to change because of the uncertain policies of US President Donald Trump.

The budget office also anticipates a slowdown in American GDP growth due to retaliatory tariffs. As a result, the agency now projects a total deficit reduction of $2.8 trillion.

Among the new import duties in place as of May 13 were a 30% surtax on Chinese imports, a 25% levy on most vehicles, and 25% duties on Mexican and Canadian products.

The head of the office, Phillip Swagel, estimates the import tariffs to reduce US GDP by 0.6% by 2035 and potentially accelerate inflation by 0.9% by 2026.