Trump's Tariff Plan Could Cut Deficit By $2.8 Trillion Over A Decade — But Not Without Consequences, Warns CBO

The Congressional Budget Office (CBO) has projected that President Donald Trump‘s extensive tariff plan will decrease deficits by $2.8 trillion over the next 10 years. However, the plan is also expected to cause economic contraction and inflation.

What Happened: The CBO’s analysis report dated June 4 suggests that the Trump administration’s proposed widespread tariffs on global countries would have a significant impact on American households. The analysis predicts that households would ultimately reduce their purchases from countries affected by the additional tariffs.

The CBO forecasts that the tariffs will increase the average annual inflation rate by 0.4 percentage points in both 2025 and 2026. Its projections are based on the assumption that the tariffs announced between January and May will remain in place permanently.

The report also acknowledges that its estimates are subject to “significant uncertainty,” partly because the administration could alter how the tariff policies are implemented.

Despite the potential deficit reduction, the CBO’s analysis indicates a decrease in overall household wealth. The tariffs are also projected to shrink the economy, reducing the gross domestic product rate by 0.06% annually.

SEE ALSO: Elon Musk, Who Called Trump’s ‘One Big Beautiful Bill’ A ‘Disgusting Abomination,’ Responds To Coinbase CEO’s Warning That Bitcoin Could Replace Dollar If Congress Isn’t Held Accountable – Benzinga

Why It Matters: This report comes at a time when Trump’s “One Big Beautiful Bill Act” has been the subject of much debate. On June 3, Representative Marjorie Taylor Greene (R-Ga.) expressed her strong opposition to the bill due to a controversial AI provision. This provision, which Greene was unaware of, would prevent states from regulating artificial intelligence for the next 10 years.

On the other hand, Senator Elizabeth Warren (D-Mass.) criticized the bill for potentially stripping health coverage from millions of Americans and disproportionately benefiting billionaires like Jeff Bezos and Mark Zuckerberg.

Furthermore, Trump ally, Tesla Inc. CEO Elon Musk, launched an intense criticism of the bill on X, calling it a “Disgusting Abomination” that could bankrupt Americans.

Earlier in May, Trump’s $3.8 trillion tax-and-spending package, dubbed his “big, beautiful” tax bill, narrowly passed the U.S. House of Representatives, but faces an uncertain fate in the Senate.

The bill promises immediate economic stimulus through broad tax cuts and increased defense spending, but market analysts warn of significant long-term fiscal consequences.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.













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