A significant shift in U.S. trade policy is set to have major fiscal repercussions, with recent tariff adjustments projected to add approximately $1.1 trillion to the federal budget deficit over the next decade. This assessment comes from Phillip Swagel, director of the non-partisan Congressional Budget Office (CBO).
In an interview, Swagel detailed the complex fiscal impact of recent judicial and executive actions. The U.S. Supreme Court's recent decision to curtail presidential authority to impose tariffs under the International Emergency Economic Powers Act (IEEPA) alone would have added an estimated $2 trillion to deficits over ten years, he stated.
To mitigate this loss, the current administration has moved to replace IEEPA tariffs with other trade measures. According to Swagel, these new measures could recoup between $800 billion and $900 billion, amounting to just under half of the revenue lost from the court's ruling. "The deficit over 10 years would be about $1.1 trillion higher because of the net of the Supreme Court taking away some tariffs, the administration putting back some," Swagel explained.
He cautioned that arriving at a precise deficit figure remains difficult until the process is finalized, noting the federal government retains significant authority to impose and adjust new tariffs. Swagel also highlighted other economic pressures, pointing out that the impact of the ongoing war against Iran on energy prices is currently offsetting the economic boost expected from the 2025 tax cuts.
The discussion comes against a backdrop of substantial U.S. fiscal challenges. Government data shows the U.S. recorded a $1.16 trillion federal budget deficit in the first half of fiscal year 2026, which began on October 1, 2025. Furthermore, the nation's total outstanding public debt stood at $38.95 trillion as of last week, underscoring the scale of existing financial obligations.
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Tariff changes to add $1.1 trillion to US budget deficit over 10 years
cgtn.com
