CBO Ups Its Estimate of Trump Tariff Revenue
August 28, 2025
Here’s an excerpt of that finding from the CBO’s update:
As of August 19, we estimate that the effective tariff rate for goods imported into the United States has increased by about 18 percentage points when measured against 2024 trade flows. We project that increases in tariffs implemented during the period from January 6, 2025, to August 19 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period. By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether.
Because of recent changes in tariffs, those estimates are larger than the $2.5 trillion decrease in primary deficits and $0.5 trillion reduction in interest outlays that we projected in early June in a report that examined the effects of the tariffs implemented between January 6 and May 13, 2025.
The new estimate assumes the federal government will keep President Trump’s announced tariffs permanently in place. This assumption means the new tariff revenue projections may be overstating the amount of extra cash going to Uncle Sam.
That’s because President Trump’s negotiating tactic involves imposing very high tariffs on imported goods and then reducing them later as he negotiates trade deals.
The CBO’s estimates also assume Washington, D.C.’s politicians and bureaucrats won’t discover new ways to spend more money in the years ahead.
An Improved Fiscal Outlook
For now, the CBO’s forecast shows that the combination of larger tariff collections and the increased spending of the One Big Beautiful Bill Act is positive for the U.S. government’s fiscal outlook.
Standard and Poor’s, the first credit agency to downgrade the U.S. government’s credit score 14 years ago during the Obama administration, just affirmed the federal government’s AA+ credit rating. Reuters reports:
S&P Global on Monday affirmed its “AA+” credit rating on the U.S., saying the revenue from President Donald Trump’s tariffs will offset the fiscal hit from his massive tax-cut and spending bill.
Trump signed the “One Big Beautiful Bill Act” into law in July after it was passed by the Republican-controlled Congress. The bill, which delivered new tax breaks, also made Trump’s 2017 tax cuts permanent.
Likewise, Fitch Ratings, the second major credit rating agency to lower the U.S. government’s credit score two years ago during the Biden administration, also cited higher tariff revenue in affirming its AA+ rating.
Fitch, however, notes “the U.S. has not taken meaningful action to address its large fiscal deficits, rising debt burden, or the looming increase in spending tied to an aging population”.
Therefore, the U.S. government’s fiscal health will remain an ongoing problem until these factors are addressed. The most meaningful thing the U.S. government can do to improve its finances is to restrain its spending growth.
