Hold onto your wallets, folks 💸. Recent twists and turns in US trade policy are set to have a major impact on the nation's bottom line. According to a new analysis from the Congressional Budget Office (CBO), changes to American tariffs could add a staggering $1.1 trillion to the federal budget deficit over the next decade.
CBO Director Phillip Swagel laid out the numbers in a recent interview. He explained that the US Supreme Court's decision to strike down former President Donald Trump's authority to impose tariffs under a specific emergency law was a game-changer. That ruling alone, Swagel noted, would have added a jaw-dropping $2 trillion to deficits over ten years if left unchecked.
But the story doesn't end there. The current Trump administration has been working to replace those lost tariffs with other trade measures. This maneuvering is expected to recoup some—but not all—of that lost revenue. Swagel estimates these new measures could bring in between $800 billion and $900 billion. The net result? A still-massive $1.1 trillion addition to the deficit.
"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 told Bloomberg.
Figuring out the exact final number is tricky, though. As Swagel pointed out, the federal government still has significant power to slap on new tariffs or change existing ones whenever it wants, making the final deficit impact a moving target.
This fiscal drama is unfolding against a complex economic backdrop. Swagel mentioned that the economic boost from the 2025 tax cuts is being offset by the impact of the war against Iran on global energy prices.
The scale of the challenge is already clear in the latest numbers. The US recorded a federal budget deficit of $1.16 trillion just in the *first half* of the current fiscal year 2026 (which started last October). Meanwhile, the country's total public debt hit a record $38.95 trillion as of last Friday. This tariff turmoil suggests the road to fiscal stability just got a lot rockier.
Reference(s):
Tariff changes to add $1.1 trillion to US budget deficit over 10 years
cgtn.com
