The director of the Congressional Budget Office (CBO), Phillip Swagel, stated that President Donald Trump‘s tariffs are projected to gross $800 billion over the next decade.
What Happened: Phillip Swagel, the director of the CBO, told CNBC on Thursday that the existing tariffs, not including the ones set to commence on April 2, could generate $800 billion in customs duties over the next decade.
President Donald Trump has declared a 25% duty on all non-U.S. manufactured cars, set to be enforced from April 2. This move follows a delay in implementing a series of earlier tariffs.
However, the overall impact of this figure on the federal budget remains uncertain. The tariffs could trigger retaliation from other nations, potentially damaging U.S. firms selling products overseas. Furthermore, U.S. companies might pass on price hikes due to sourcing raw materials subject to tariffs to consumers, possibly causing a surge in inflation.
While the incoming customs duties could enhance government revenues, impending tax cuts could reduce tax revenue, potentially offsetting these increases.
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Why It Matters: Since taking office, President Trump has twice imposed tariffs on Canada and Mexico, two key U.S. trading partners, only to delay them later. This lack of consistency has made it challenging for forecasters to determine the specifics of upcoming tariffs or even their likelihood of implementation.
Several countries have retaliated against U.S. tariffs. China imposed 10-15% tariffs on U.S. agricultural products, while Canada plans tariffs on over $100 billion of U.S. goods. Mexico initially threatened tariffs but backed off after an agreement to delay them.
Meanwhile, according to Goldman Sachs, the new 25% tariff on imported autos could raise vehicle prices by $5,000 to $15,000, depending on the model and country of origin. This could significantly impact auto demand and reshape the competitive dynamics of the U.S. automotive market.
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