Trumps tariffs would shrink U.S. economy, raise inflation despite cutting deficits, CBO says [Video]

U.S. President Donald Trump’s sweeping tariff plan would cut deficits by US$2.8-trillion over a 10-year period while shrinking the economy, raising the inflation rate and reducing the purchasing power of households overall, according to an analysis released Wednesday by the Congressional Budget Office.

The numbers were revealed in a letter sent to Democratic congressional leadership outlining how the Trump administration’s plan to impose wide-ranging tariffs on countries around the world will affect American households.

Baked into the CBO analysis is a prediction that households would ultimately buy less from the countries hit with added tariffs. The budget office estimates that the tariffs would increase the average annual rate of inflation by 0.4 percentage points in 2025 and 2026.

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The budget office’s model also assumes that the tariffs, announced through executive action between January and May, will be …