Saturday, August 23, 2025

Tariffs and the National Debt

8/22/25 Congressional Budget Office estimates effect of tariff changes:
"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period. By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

As deficits fall, so will interest rates 

2 comments:

  1. "...$3.3 trillion if the higher tariffs persist for the 2025‒2035 period."

    That's *if* the tariffs stay at their Trumpian-shock-and-awe levels for the whole of the next 10 years, which seems highly unlikely. And that would still only mean $330 billion per year, which is couch cushion change these days. So this projection isn't really as impressive at it looks at first glance.

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