Could Trump’s tariffs save the U.S. from debt—or push the economy to the edge? The latest report from the Congressional Budget Office (CBO) reveals a shocking twist: a $2.8 trillion deficit cut over a decade sounds like a win, but it may come with rising prices and slower economic growth that hit everyday Americans hard.
In a recent analysis, the CBO shared that if former President Donald Trump’s proposed tariffs stay in place for 10 years, the U.S. government could collect $2.8 trillion in extra revenue. These tariffs would apply to most imports, including a hefty 30% tax on goods from China and 25% on items like steel and cars. But here’s the tradeoff—while the plan might bring down the deficit, it could also cause inflation to spike and the overall economy to shrink.
What’s in Trump’s Tariff Proposal?
Trump’s tariff plan includes:
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A 10% universal tariff on imports from most countries.
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A 30% tariff specifically on goods from China and Hong Kong.
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A 25% tariff on certain key imports like steel, aluminum, and automobiles.
These measures were put into effect through executive orders between January and May 2025. While some of the actions faced court challenges, they were allowed to remain active during ongoing appeals.
The Good News: Cutting the Deficit
According to the CBO, the new tariff rules could help reduce the national deficit by $2.8 trillion over the next 10 years. This revenue could be used to reduce debt, fund programs, or support infrastructure.
The Bad News: Higher Prices and Slower Economy
However, the flip side is concerning. The tariffs are expected to:
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Increase inflation by 0.4% in both 2025 and 2026.
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Lower economic growth by an average of 0.06% each year, adding up to a 0.6% drop in GDP over a decade.
That means higher prices at the grocery store, at the gas pump, and for goods like electronics and clothing. Small businesses might suffer, and everyday families could feel the pinch.
Is It Worth It?
Economists are divided. On one hand, reducing the deficit is critical for long-term stability. On the other hand, inflation and slower growth could make life more expensive for regular Americans.
To make things more complex, this report doesn’t include Trump’s proposed “One Big Beautiful Bill” that contains major tax cuts and spending changes. Early analysis of that bill shows it could add $2.4 trillion to the deficit, potentially canceling out the gains from the tariffs.
Why This Matters to You
If these policies go forward, they could reshape the U.S. economy. From product prices to jobs, the effects of trade policy reach everyone. Whether Trump’s plan helps or hurts will depend on how it’s managed, how other countries respond, and what additional steps are taken to balance growth and fiscal responsibility.