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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Trump is crowing about his tariffs reducing the debt by $4 trillion.
But there are some caveats
By Tami Luhby, CNN
Updated:
5:00 AM EDT, Tue August 26, 2025
Source: CNN
President Donald Trump is making sure to share – repeatedly – a
recent government analysis that shows his sweeping array of tariffs is
expected to reduce the federal debt by $4 trillion over the next
decade, more than forecast only a few months ago.
The president has referenced the in multiple remarks and on since it
was released on Friday, saying it shows the success of one of his key,
but controversial, policy platforms.
“The tariffs came in at $4 trillion,” Trump said at an Oval Office
event on Monday afternoon, the second time he mentioned the report that
day. “The CBO, they just announced it. I told them that was going to
happen, but they refused to give us credit for it. Now they’re giving
us credit because the money is flowing in.”
However, how much revenue the US actually realizes depends on several
important factors, including whether the current levies remain in place
into 2035 and how the nation reacts to the higher tariffs. The tariffs
are expected to and potentially weaken the economy, which could in turn
reduce federal revenue. (The CBO’s analysis did not take the economic
impact into account.)
Already, the president has announced some recent changes not
incorporated into the analysis, including the coming suspension of for
products under $800. On the flip side, a is considering whether Trump
overstepped his legal authority to impose many of the tariffs, which
may lead to at least some of them being undone.
Also, the president hasn’t mentioned that the , his domestic policy
agenda that he signed into law last month, is expected to increase the
federal debt by an estimated $4.1 trillion or so between 2025 and 2034,
more than his tariffs are forecast to bring in.
Imposing sweeping tariffs
Since taking office in January, Trump has slapped tariffs on a wide
range of goods and countries, including increasing tariffs on most
Chinese goods by 30%, on automobiles and car parts by up to 25%, and
on most imports of steel and aluminum by 50%, among other examples.
The levies are expected to for computers and other electronics,
clothing, toys, furniture and more, even as the president insists that
foreign governments will pick up the tab.
The beefed-up tariffs are projected to lower the federal deficit by
$3.3 trillion over the 2025 to 2035 period, plus reduce interest costs
by an additional roughly $700 billion, for a total impact of $4
trillion, according to the CBO’s latest estimate. It looked at
tariffs imposed as of August 19.
The CBO had estimated in early June that the tariffs implemented
through May 13 would reduce the federal debt by a total of roughly $3
trillion.
However, Trump has also modified the rates on countries and sectors
numerous times.
For instance, Trump slapped a minimum 20% tariff on most Chinese goods
in April. But within days, he increased rates to 145% in response to
China imposing higher tariffs on American goods. In May, following
bilateral trade negotiations, both countries agreed to lower rates on
one another’s goods, with the US charging a minimum of 30%. Rates
are set to stay at the previously agreed upon levels through November.
However, Trump said Monday that he’s prepared to hike tariffs on
Chinese goods as high as 200% if it doesn’t ship more rare-earth
minerals to the US.
The president also recently said he would consider distributing at
least some of the tariff revenue to Americans in the form of , though
Treasury Secretary Scott Bessent said on CNBC last week that the money
would go to .
Tariffs and other customs duties have generated nearly $156 billion in
revenue so far this year, through August 22, according to Treasury
Department data.
The revenue is more than most people expected, said Marc Goldwein,
senior policy director for the Committee for a Responsible Federal
Budget, a watchdog group. And it could be difficult to pull back,
though it would depend on the economic consequences.
“If we see a significant increase in inflation and a recession or
something, it’s more likely that these get reversed, either wholesale
or piece-wise through trade deals,” he said, noting that a prior CBO
estimate that took economic impact into account showed tariffs would
likely decrease revenue somewhat. “Whereas, if you just see a
one-time, small price shift and some mild economic weakness, we may
learn to live with these.”
CNN’s Elisabeth Buchwald contributed to this report.
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