Trump's Tariff Strategy: A $4 Trillion Gamble

President Donald Trump's increased tariffs on U.S. imports could significantly reduce the national deficit by $4 trillion over the next decade, according to the Congressional Budget Office. The additional revenue may help offset deficit increases spurred by recent tax cuts and spending, posing a complex fiscal landscape.

President Donald Trump's strategy of increasing tariffs on U.S. imports from foreign countries has the potential to reduce the national deficit by $4 trillion over the next decade, according to estimates from the Congressional Budget Office released Friday.

The CBO reported that if global tariff hikes continue, the increased revenue could shrink primary deficits by $3.3 trillion and cut federal interest payments by $0.7 trillion during the same period. However, the current top tariff rates are subject to change due to ongoing negotiations with trading partners and international legal challenges.

The additional tariff revenue could help counterbalance the $3.4 trillion deficit increase predicted due to the Republican tax-cut and spending bill. As the U.S. federal debt remains at $37.18 trillion, the fiscal responsibility falls on Congress, which must pass government funding bills by the end of September or face a shutdown. Meanwhile, U.S. tariff rates saw an increase to an average of 16.7% in August, up from 15.1% in June, resulting in over $26 billion in duties collected this fiscal year.

(With inputs from agencies.)