The Congressional Budget Office (CBO) has released a key economic prediction relating to President Trump’s tariff policy. In a letter issued to Senate Democrats on Wednesday, the CBO shared its analysis that the tariff policy would reduce primary budget deficits by $2.5 trillion.
The CBO also included findings that the tariffs would reduce federal spending on interest by $0.5 trillion, resulting in a total deficit reduction of $3.0 trillion.
President Trump shared the finding in a Truth Social post on Thursday, noting that the CBO’s projections could be useful in keeping people informed about the potential economic impact of his tariff policy.
“Shockingly, the Democrat controlled CBO just announced that the Tariffs will be reducing the Deficit by at least $2.8 Trillion Dollars,” Trump said. “Too bad this information couldn’t have been released earlier, it would have kept people from knowingly saying untruths.”
The CBO projections showed a reduction in the size of the U.S. economy based on the tariffs that other countries would impose in response to the Trump tariffs. However, after factoring in the effects of tariffs from different countries, the CBO found the overall fiscal impact would be a reduction of $2.8 trillion in the federal deficit.
The CBO acknowledged that any economic impact from tariff policy would be dependent on the responses of businesses and consumers. The letters stated economic predictions could change based on adjustments to tariff policy, and that “consumers and businesses may change their behavior less in response to less targeted tariffs. In that case, revenues would be higher than CBO projects.” The CBO stated that it would continue to monitor consumer responses to tariff policy and update its future projections accordingly.