September funding deadline looms for lawmakers
President Donald Trump’s tariff increases on US imports could reduce the federal deficit by $4 trillion over the next decade, according to new estimates from the Congressional Budget Office (CBO), Reuters reported.
The CBO said higher tariffs could shrink primary deficits by $3.3 trillion and reduce federal interest payments by $0.7 trillion through 2035. Average US tariff rates climbed to 16.7% in August from 15.1% in June, with more than $26 billion in duties collected so far this fiscal year, Reuters noted.
The Washington Examiner reported that the CBO now expects about $200 billion in tariff revenue this year. This is a significant revision from its June outlook, which forecast $2.5 trillion in deficit savings and $500 billion in interest savings.
Impact of tax and spending legislation
Tariff revenues could offset the projected $3.4 trillion increase in deficits tied to the Republicans’ One Big Beautiful Bill Act (OBBBA), Reuters’ report said. The legislation, which includes tax cuts and new spending priorities, has drawn scrutiny for its potential long-term fiscal effects.
According to Fortune, the Committee for a Responsible Federal Budget (CRFB) estimates the OBBBA will increase deficits by $4.6 trillion over the next decade. The group said tariff revenue could offset about $3.4 trillion of that amount, though legal challenges to parts of the tariff regime could reduce those savings to less than $1 trillion.
Debt, interest, and economic concerns
The US federal debt stands at about $37.2 trillion, Treasury data show. Fortune reported that debt held by the public could rise from 100% of GDP today to 120% — or as high as 134% under adverse scenarios — by 2035. Interest payments are projected to total $14 trillion over the next decade.
ABC News noted that rising debt levels could put upward pressure on interest rates, increasing borrowing costs for households and businesses. Analysts told ABC that higher debt-service costs could slow wage growth and dampen economic output, while credit-rating downgrades from agencies such as Moody’s, Fitch, and S&P highlight investor concerns about the U.S.’s long-term fiscal trajectory.
Congress faces a funding deadline at the end of September, with the risk of a government shutdown if spending bills are not passed, Reuters said. The CRFB has urged lawmakers to consider measures that would align spending and revenue under a “pay-as-you-go” approach.
