Proposed tariff hikes by President-elect Donald Trump could significantly reduce the federal deficit over the next decade and would do so at modest cost to inflation and economic output, according to a new Congressional Budget Office (CBO) analysis, which is the highest-profile impact assessment yet of Trump’s proposed tariffs.
The nonpartisan agency’s analysis, released in a Dec. 18 letter to lawmakers, assumes three scenarios under Trump’s trade policy proposals: a universal 10 percent tariff on all imports; a 60 percent tariff on Chinese imports; and a combination of the two. Under a combined scenario, the CBO projects that the Trump tariffs could slash deficits by as much as $2.9 trillion over the next decade. This would slash by roughly 13 percent the estimated $22.1 trillion in total cumulative deficits that the CBO expects will be generated through 2034….