Trump's tariff plan would cut U.S. budget deficit by $2.8 trillion over 10 years

U.S. President DonaldTrump's massive tariff plan would reduce the budget deficit by $2.8 trillion over a 10-year period while shrinking the economy, raising inflation and reducing household purchasing power overall, according to an analysis released Wednesday by the Congressional Budget Office.

As CBS News notes, the figures were released in a letter sent to the Democratic congressional leadership outlining how the Trump administration's plan to impose sweeping tariffs on countries around the world would affect American households.

The analysis predicts that households will end up buying less in countries affected by the additional tariffs. The Budget Office estimates that the tariffs would increase the average annual inflation rate by 0.4 percentage points in 2025 and 2026.

The budget office's model also assumes that tariffs announced by the executive branch between January and May would be permanent.

Following the analysis, a federal court struck down the high tariffs Trump had invoked under the Emergency Powers Act. The appeals court allowed the Trump administration to continue collecting the fees while the case goes through the appeals process.

Largely confirming the predictions of other economic models, these estimates show that the trade-off for reducing the deficit by $2.8 trillion over 10 years would be an overall reduction in household wealth. In addition, the tariffs would shrink the economy or reduce gross domestic product growth by 0.06 percentage points per year.

In April, the U.S. president announced that he would cancel his tariffs on most countries for 90 days and raise the tax rate on Chinese imports to 125%.

Last week, he announced plans to raise tariffs on steel and aluminum imports to 50%, which will negatively impact business and likely further raise prices for consumers. The 50% tariffs went into effect on Wednesday. The Organization for Economic Cooperation and Development forecast Tuesday that the U.S. economy, the world's largest, will slow to just 1.5% growth in 2026.

Reprinted from https://news.am/