US tariff changes could add $1.1T to deficits over decade: Budget office

Recent changes in US tariff policy could raise federal budget deficits by about $1.1 trillion over the next decade, though final estimates remain uncertain, Congressional Budget Office (CBO) Director Phillip Swagel said Monday.

Speaking in an interview with Bloomberg Television, Swagel said the US Supreme Court’s decision striking down President Donald Trump’s authority to impose tariffs through emergency economic powers would add about $2 trillion to deficits over 10 years.

The administration’s replacement trade measures are expected to recover roughly $800 billion to $900 billion in revenue, or “just shy of half” of the amount removed by the ruling, he said.

“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 said.

He added that the administration still has broad authority to impose or modify tariffs, making it difficult to calculate the final fiscal impact until the process is completed.

“We haven’t gotten to a point at which we’re comfortable making that kind of long-term” estimate, he said.

Swagel also said higher energy prices linked to the war in Iran are largely offsetting the economic boost from tax cuts enacted in 2025.

“It looks like the higher energy prices affecting households are roughly offsetting the benefits” from the cuts, he said, adding that the CBO has not yet completed a new economic forecast that would underpin a further budget update.