Committee for a responsible federal budget praises tariffs…for raising revenue

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Raise your hand if you expected President Trump’s sweeping new tariff regime to get a relatively positive assessment from . . . the Committee for a Responsible Federal Budget.

The CRFB is one of those lonely voices in Washington reminding American policymakers and the public that the country can’t just borrow and spend forever, a message of responsibility and long-term thinking that almost everyone in the nation’s capital hates and largely ignores.

A new analysis by CRFB gives the Trump administration’s tariff regime credit where it’s due — it’s bringing in a ton of money, which should make the annual deficit numbers better this year and in future years

The group adds, “expect tariff revenue to grow further and ultimately rise to $40 to $50 billion per month (over 1.5 percent of GDP), before declining some as supply chains adjust.”

The think-tank emphasizes, “Our estimates are very rough and intended to reflect the general magnitude of the policies rather than precise scores, given the complexity of the tariffs and their impacts.” As you may have noticed, the tariff rates have changed quickly during Trump’s half-year or so in office.

The U.S. government is raking in a lot more revenue than it was projected to before Trump’s far-reaching tariff regime started. CRFB continues:

To put the tariffs in context, they are larger than what would be collected from a new 1 percent payroll tax, a $25 carbon tax, an elimination of Medicare Advantage overpayments, or a 17 percent reduction in military personnel. They are somewhat smaller than what would be collected from a 5 percent broad Value-Added Tax (VAT) or reversing the One Big Beautiful Bill Act (OBBBA).”

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Although there are many legitimate concerns over the tariffs – including their impact on the economy and the level of uncertainty they are creating – policymakers should not repeal them without an adequate replacement for the revenue loss. Nor should they divert the revenue away from deficit reduction and toward new spending, tax cuts, or rebates.

If policymakers want to remove the tariffs going forward, they should put forward alternative revenue sources or spending cuts to avoid worsening an already unsustainable fiscal outlook.

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