The U.S. Congressional Budget Office (CBO) has released a report detailing the impact of President Trump’s extensive global tariffs on the federal deficit and the economy. The analysis predicts that these tariffs will reduce the deficit by $2.8 trillion over the next decade. However, it warns of potential economic slowdown, increased inflation, and diminished purchasing power for American households. The report highlights the effects of the tariffs, implemented through executive orders from January to May, across various countries. It estimates a 0.4 percentage point increase in annual inflation rates between 2025 and 2026 due to decreased imports from tariff-affected nations. While a federal court previously ruled that invoking emergency powers for tariff imposition was beyond authority, an appeals court has allowed the tariffs to remain during litigation. The CBO’s findings align with other economic models, suggesting a reduction in household wealth and overall economic contraction as a consequence of this deficit reduction strategy. The report estimates a permanent 0.06 percentage point decrease in the annual growth rate of U.S. real GDP. A prior report from the University of Pennsylvania’s Wharton School budget model in April suggested a more pessimistic outlook, forecasting potential long-term GDP shrinkage and wage level drops. Notably, the CBO acknowledges substantial uncertainty in its calculations due to the possibility of the Trump administration altering tariff policy execution at any time.