The Congressional Budget Office (CBO) estimates that Trump’s proposed tariffs could reduce the U.S. federal deficit by $2.8 trillion over the next decade, potentially offsetting the $2.4 trillion cost of his proposed tax bill. However, experts from across the political spectrum have raised concerns about the long-term viability of relying on tariffs to cover the massive spending increase associated with the policy. While the nonpartisan CBO suggests that the tariffs could help bring the deficit into balance, many analysts, including those from both progressive and conservative think tanks, warn that the administration’s inconsistent approach to the policy makes it an unreliable revenue source. The potential impact of Trump’s tariffs and tax cuts on the economy and household wealth remains a subject of intense debate, with critics arguing that the benefits could be outweighed by economic contraction and reduced household income.
Senate Republicans are currently working on refining the president’s comprehensive tax bill, which includes efforts to extend and permanently establish the tax policies from his first term. However, the tax portion of the bill alone is projected to cost about $4 trillion, with the CBO report indicating that the full legislative package would add $2.4 trillion to the deficit over the next decade. The debate over the tariff strategy’s sustainability is gaining momentum, especially with rising interest rates and the nation’s growing national debt, which has surpassed $36 trillion. Tax experts like Joe Rosenberg from the Urban-Brookings Tax Policy Center emphasize that the CBO’s findings are particularly concerning today due to these financial challenges, suggesting that the tariff policy’s shifting nature complicates its long-term viability.
Meanwhile, Tad Dehaven of the Cato Institute argues that the uncertainties surrounding the tariffs—such as ongoing legal challenges and their varying application—make the projected benefits of the policy ‘extraordinarily unlikely.’ He notes that even if tariffs remained in place for a decade, the economic impact could be offset by higher taxes on households and businesses. This debate has sparked a broader discussion about the balance between fiscal responsibility and economic growth, with some critics warning that the current strategy could negatively affect Main Street while benefiting elite interests. Analysts remain divided on how effectively Trump’s approach can address the nation’s fiscal challenges, highlighting the need for a more stable and predictable economic policy framework.