US tariffs to swell deficits by $1.1 trillion over decade: Budget office

The Congressional Budget Office has issued a stark warning regarding the financial implications of Washington's evolving trade strategy. Director Phillip Swagel revealed in an interview with Bloomberg Television that alterations to American tariff structures could substantially expand the nation's budget deficits over the next ten years. The nonpartisan agency estimates that the net effect of recent policy modifications would add roughly $1.1 trillion to the federal shortfall throughout the decade, creating significant headwinds for fiscal stability.

Judicial intervention and revenue shortfalls

A recent Supreme Court decision striking down presidential authority to levy tariffs through emergency economic powers has removed approximately $2 trillion in projected revenue from government coffers, Swagel noted. However, the administration's subsequent replacement measures are anticipated to recapture only between $800 billion and $900 billion of those losses. This gap represents slightly less than half of the original tariff revenue stream, complicating efforts to forecast the government's long-term fiscal position.

Administrative flexibility and economic pressures

Despite judicial constraints, the White House retains considerable flexibility to impose or modify customs duties through alternative legal mechanisms. Swagel emphasized that this ongoing administrative discretion makes precise long-term projections impossible until policymakers finalize their comprehensive approach. The fiscal uncertainty compounds existing economic pressures, including elevated energy costs connected to military confrontations involving Iran that threaten to neutralize the stimulative effects of recent tax reductions enacted in 2025.