PRESIDENT Donald Trump’s increased tariffs on US imports from foreign countries could reduce the national deficit by $4 trillion over the next decade, the Congressional Budget Office (CBO) estimated yesterday.
If Trump’s global tariff hikes continue, increased revenue could shrink primary deficits by $3.3trn and cut federal interest payments by $0.7trn over the next decade, CBO, Congress’ nonpartisan analyst, said.
The current top tariff rates may not hold as negotiations with trading partners and international legal challenges are ongoing.
But the additional tariff revenue could help offset the deficit increases triggered by the Republicans’ tax-cut and spending bill passed this year. CBO estimated this would widen the deficit by $3.4trn over the next decade.
The US federal debt is $37.18trn, according to the Treasury Department. It has continued to grow under Republican and Democratic administrations as the US Congress continues to authorise the federal government to spend more money than it takes in.
Lawmakers face a government funding deadline at the end of September or risk a shutdown if spending bills are not passed.
The latest CBO estimate marks an increase from June when it forecast a $2.5trn reduction in primary deficits and a $500 billion cut in interest outlays.
US tariff rates across countries and products averaged 16.7 per cent in August, up from 15.1pc in June, according to Oxford Economics. More than $26bn in duties have been assessed by US Customs and Border Protection this fiscal year, far surpassing the hundreds of millions recorded in the previous year, according to the analysis.
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