Donald Trump’s sweeping tariff measures are set to reduce US budget deficits by $4 trillion over the next decade, according to new projections from the Congressional Budget Office (CBO), the Financial Times reported. The estimates offer a fiscal boost that could partly offset concerns over the cost of the former president’s signature spending legislation.
The CBO said on Friday that tariffs imposed so far this year would lower primary deficits by $3.3 trillion through 2035, while reduced interest payments on debt would contribute an additional $700 billion. “As a result, the changes in tariffs will reduce total deficits by $4tn altogether,” CBO director Phillip Swagel said.
The figure marks a sharp increase from the watchdog’s earlier projection in May, which estimated $3 trillion in deficit reduction based on tariff measures announced at the time. The higher revenue forecast suggests tariffs will help blunt the impact of Trump’s One Big Beautiful Bill Act, which is expected to add $4.1 trillion to US debt levels over the same period.
US public finances have been under heightened scrutiny in recent months, with investors warning that the country’s debt-to-GDP ratio — hovering around 100% — is weighing on the appeal of Treasuries.
Still, the CBO cautioned that the estimates remain “subject to significant uncertainty,” pointing to unclear timing, potential exemptions, and the lack of precedent for tariffs of this scale. Moreover, the analysis did not account for the impact of tariffs on US economic growth, which many economists expect to weaken under higher trade barriers.
The report nonetheless strengthens the administration’s case. Treasury Secretary Scott Bessent said earlier this week that tariff revenues would rise “substantially” this year, adding: “We’re going to bring down the deficit to GDP. We’ll start paying down the debt, and then at that point that can be used as an offset to the American people.”
Credit rating agency S&P Global also acknowledged the fiscal cushion from tariff income. In affirming the US government’s credit rating, S&P noted that “broad revenue buoyancy, including robust tariff income, will offset any fiscal slippage from tax cuts and spending increases.”
