Tariff changes to add $1.1 trillion to US budget deficit over 10 years

Recent adjustments to US tariffs could add $1.1 trillion to the federal budget deficit over 10 years, according to Phillip Swagel, director of the Congressional Budget Office (CBO).

The US Supreme Court's recent decision striking down US President Donald Trump's ability to impose tariffs, citing the International Emergency Economic Powers Act (IEEPA) alone, would add $2 trillion to deficits over a decade, Swagel said Monday in an interview with Bloomberg.

The move by the Trump administration to replace IEEPA tariffs with other trade measures could add between $800 billion and $900 billion, just under half of the revenue lost due to the ruling, according to Swagel.

"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," he said.

It is difficult to determine an exact deficit figure until the process is finished, as the federal government has significant authority to impose new tariffs and change them at will, Swagel added.

He said that the impact of the war against Iran on energy prices is offsetting the boost to the economy from the 2025 tax cuts.

The United States recorded a $1.16 trillion federal budget deficit in the first half of fiscal year 2026, which began on October 1, 2025, and the country's total outstanding public debt was $38.95 trillion as of Friday, according to data issued by the US government.