CBO: Tariff Policy Shifts Could Add $1.1 Trillion to Deficit

Workers unload from a freight ship in the dockyard at the Port of Detroit. (Matthew Hatcher/Bloomberg)

Recent shifts in U.S. tariff policy may add $1.1 trillion to federal budget deficits over a 10-year period, though exact calculations aren’t yet possible, according to the director of the nonpartisan Congressional Budget Office.

“We haven’t gotten to a point at which we’re comfortable making that kind of long-term” estimate, CBO Director Phillip Swagel said in an interview with Bloomberg Television on April 27.

The Supreme Court’s decision striking down President Donald Trump’s ability to impose tariffs using emergency economic powers on its own adds $2 trillion to deficits over a decade, Swagel said. Trump’s moves so far to replace the revenue stream with other trade measures add up to $800 billion to $900 billion — or “just shy of half” the revenue canceled by the ruling, he said.

“The deficit over 10 years would be about $1.1 trillion higher because of the net of the Supreme Court taking away some tariffs, the administration putting back some,” Swagel said. “The administration has a lot of authority to impose new tariffs and change them around,” so it’s difficult to figure on an exact deficit number until the process is complete, he indicated.

Swagel also said that the impact on energy prices from the war in Iran is offsetting the boost to the economy from the tax cuts enacted in 2025. 

“It looks like the higher energy prices affecting households is roughly offsetting the benefits” from the cuts, he said. “There’s of course effects on business investment and effects on inflation and all that is in mix. We haven’t had to do another budget update, so we haven’t done the economic forecast yet that would underpin that.”