Trump’s tariff strategy could finance his tax bill; experts
President Donald Trump’s ambitious tariff strategy has been pitched by the White House and congressional Republicans as a key mechanism to offset the costs of his extensive tax bill, known as the “big, beautiful bill.”
As Senate Republicans refine this legislative package, which aims to cement Trump’s first-term tax policies, experts offer varied perspectives on its feasibility.
The nonpartisan Congressional Budget Office (CBO) projects that while tariffs could significantly reduce the deficit, the overall bill’s impact on debt and economic growth raises critical questions about its long-term viability.
Balancing Tariffs and Tax Cuts
The CBO estimates the tax portion of Trump’s bill will cost approximately $4 trillion, with the entire package adding $2.4 trillion to the deficit over a decade.
However, the agency also projects that Trump’s tariffs could cut the deficit by $2.8 trillion, potentially making the bill deficit-neutral if the tariffs remain consistent.
Joe Rosenberg, a senior fellow at the Urban-Brookings Tax Policy Center, told Fox News Digital, “I think what we’ve seen is that the tariff policy, again, seems to change day by day, hour by hour, minute by minute. And the administration is a little bit inconsistent about whether they view tariffs as purely a revenue source versus essentially a negotiating tool.”
Rosenberg noted that with the national debt now exceeding $36 trillion—up from $20 trillion in 2017—rising interest rates amplify concerns about the bill’s fiscal impact.
The CBO’s assumptions hinge on the permanence of tariffs, a factor complicated by their fluctuating application and potential legal challenges.
Economic Trade-offs and Expert Skepticism
Despite the projected deficit reduction, the CBO warns that Trump’s tariffs could reduce household wealth and shrink the economy annually over the next decade.
Tad Dehaven, a policy analyst at the Cato Institute, expressed doubt about the tariffs’ benefits, stating, “Let’s pretend that these tariffs are going to remain in place for 10 years at some level delineated today.”
“That’s a major tax increase, so whatever alleged benefit you’re receiving from the tax cut in the reconciliation package, it’s being offset by a tax increase. And a rather economically inefficient one.”
Conversely, Mike Palicz, director of tax policy at Americans for Tax Reform, dismissed the CBO’s analysis, calling the agency:
“a bunch of bean counters” and arguing, “you cannot go out and explain to a normal person or business that their taxes aren’t increasing next year if the Trump tax cuts are allowed to expire. That’s what the whole point of this exercise is, preventing the expiration of tax cuts, preventing the largest tax increase in American history. And no conservative, no Republican, should think that you address the deficit by raising taxes.”
