Economic Impact

The Congressional Budget Office (CBO) estimates the bill will increase the federal deficit by $2.4 trillion to $3.8 trillion over 10 years (2025-2035), or $240 billion to $380 billion per year, depending on economic growth and tariff revenue. The White House claims a $1.4 trillion deficit reduction over 10 years ($140 billion per year), relying on $2 trillion in new tariffs (e.g., 10% on all imports, 60% on Chinese goods) to offset costs. Economists doubt this revenue will materialize due to trade retaliation risks (e.g., China imposing counter-tariffs). The Tax Foundation predicts 0.8% GDP growth over 10 years from tax cuts (0.08% per year), but a $1.7 trillion dynamic deficit increase ($170 billion per year), as the modest growth won’t offset the $1.5T revenue loss from tax cuts. Elon Musk has warned the bill’s tariffs could trigger a recession by raising consumer prices and disrupting supply chains (e.g., Tesla’s costs). Debate continues over the bill’s long-term economic effects.