Trump’s tariffs could offset $4 trillion tax bill, but experts remain skeptical

President Donald Trump’s sweeping tariffs have been a hot topic in Washington, with the White House and congressional Republicans touting them as a way to help pay for the president’s massive tax bill. However, tax experts are cautioning that the impact of these tariffs on the deficit depends on whether the administration remains consistent in its approach.

The Senate Republicans are currently working on reshaping the president’s tax bill, aiming to extend and make permanent his first-term tax policies. The tax portion of the bill alone is estimated to cost around $4 trillion, and when factoring in spending cuts and other revenue sources, the Congressional Budget Office (CBO) projected that the overall legislative package would add $2.4 trillion to the deficit over the next decade.

Despite the hefty price tag of the tax bill, the CBO also found that Trump’s tariffs could reduce the deficit by $2.8 trillion over the same period. However, Joe Rosenberg from the Urban-Brookings Tax Policy Center raised concerns about the impact of the reconciliation package on the national debt, especially given the current high debt levels and rising interest rates.

With the national debt exceeding $36 trillion, up from $20 trillion when the original tax package was crafted, there are worries about the long-term implications of the proposed tariffs. Rosenberg noted the inconsistency in the administration’s stance on tariffs, with some viewing them as a revenue source while others see them as a negotiating tool.

Tad Dehaven from the Cato Institute expressed skepticism about the projected benefits of Trump’s tariffs, citing constitutional challenges and shifting applications as major hurdles. He highlighted the potential negative impact on household wealth and economic growth if the tariffs were to remain in place for a decade.

Mike Palicz, director of tax policy at Americans for Tax Reform, dismissed the CBO’s scoring of the president’s tax cuts and tariffs, labeling the agency as “bean counters” that often miss the mark on key legislation. He emphasized the importance of preventing the expiration of tax cuts to avoid the largest tax increase in American history.

In conclusion, the debate over Trump’s tariffs and tax cuts continues to divide experts and policymakers. While some see the tariffs as a way to reduce the deficit, others caution against the potential negative consequences on the economy. As the Senate works on reshaping the president’s tax bill, the ultimate impact of these policies remains uncertain.