BlockBeats News, June 5th, The Congressional Budget Office (CBO) of the United States released an analysis report on Wednesday, indicating that the Trump administration's large-scale global tariff plan would reduce the federal deficit by $2.8 trillion over the next 10 years. However, it would also lead to a slowdown in economic growth, an increase in the inflation rate, and an overall weakening of the purchasing power of American households.
This letter sent to the Democratic congressional leadership details the impact of the Trump administration's administration of broad tariffs on multiple countries on ordinary families. The report points out that the CBO's model assumes that U.S. households will eventually reduce their imports from countries subject to tariffs and predicts that between 2025 and 2026, tariffs will increase the annual inflation rate by 0.4 percentage points.
The analysis also assumes that the tariff policies announced by the Trump administration through executive orders from January to May will be implemented in the long term. Despite a federal court ruling earlier that its tariff imposition invoking emergency powers was beyond its authority, the appellate court allowed the relevant tariffs to continue to be collected during the litigation.
The CBO's conclusions are consistent with other economic models' predictions: the $2.8 trillion deficit reduction over 10 years will come at the cost of shrinking household wealth and contracting the overall economic size. The report estimates that tariffs will result in a permanent 0.06 percentage point decrease in the U.S.'s real GDP annual growth rate. An earlier report from the Wharton School of the University of Pennsylvania's budget model in April was more pessimistic, predicting that such tariffs could lead to a long-term 6% GDP contraction and a 5% wage decline.
It is worth noting that the CBO specifically emphasized significant uncertainty in its calculations in the report, one reason being that "the Trump administration may adjust the way tariffs are implemented at any time." (Jinse)
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