New Nissan cars are driven onto a rail car to be transported from an automobile processing terminal located at the Port of Los Angeles on April 3, 2024, in Wilmington, California. Tariffs are being levied by President Donald Trump on most foreign vehicles and auto parts. (Photo by Mario Tama/Getty Images)
WASHINGTON — President Donald Trump’s tariffs would decrease the deficit over the next decade but overall shrink the U.S. economy and raise costs for consumers, according to a Congressional Budget Office analysis released Wednesday.
Tariffs are paid to the U.S. government by domestic companies and purchasers who buy goods from abroad.
The nonpartisan CBO found that tariffs would reduce the nation’s primary deficit by $2.5 trillion from now until 2035, plus an additional $500 million saved from avoiding even more mounting interest payments on the U.S. debt.
But the office also found that tariffs would slow down the U.S. economy over the same time, in part by affecting behavior in the private sector.
For example, businesses may pull back from investment and growth when faced with higher costs. The CBO, the official financial scorekeeper for Congress, estimates that Trump’s tariffs, as they stand now, would lower the U.S. gross domestic product, or the total value of a country’s goods and services, on average by 0.6% per year through 2035.
In addition to increasing costs on supplies and other assets businesses use in production, the tariffs are expected to raise prices on consumer goods in the next couple years. The CBO projects the price index used to measure personal consumption will be 0.9% higher by the end of 2026.
While lower-income households spend a higher percentage of their income on consumer goods, the CBO projects that prices will increase the most on goods like home appliances and vehicles more likely to be purchased by higher earners.
The eight-page analysis only takes into account the effects of Trump’s tariffs as of May 13. These include the following taxes calculated on the value of imports: a baseline 10% on goods from most countries; a base of 30% on all goods from China and Hong Kong; 25% on most foreign vehicles and auto parts; 25% on steel and aluminum; and 25% on certain goods from Canada and Mexico.
The CBO released the figures in response to a request from U.S. Senate Democrats wanting to know the cost of the administration’s import taxes.
The report did not take into account any tariff changes after May 13, including Trump’s doubling to 50% the import taxes on steel and aluminum. The report also did not factor in changes that could result from a May 29 trade court decision striking down most of Trump’s tariffs — though an appeals court swiftly left them in place while the case plays out.
Democratic Rep. Mark Pocan at a town hall meeting in Eau Claire, with a chair for Republican Rep. Derrick Van Orden who represents the 3rd Congressional District that includes Eau Claire. The chart behind Pocan shows most of the tax cuts passed by House Republicans go to those in the highest income brackets. | Photo by Frank Zufall/Wisconsin Examiner
“Is Derrick here?” asked U.S. Rep. Mark Pocan, the Democratic congressman representing Wisconsin’s 2nd Congressional District, which includes Dane County. Pocan was in Eau Claire, the 3rd Congressional District represented by Derrick Van Orden, a Republican, on Saturday, May 31, at a town hall organized by Opportunity Wisconsin, a coalition of grassroots groups, at the Pablo Center at the Confluence, Eau Claire’s performing arts center.
Van Orden was invited to attend the event but declined.
Pocan is one of several congressional Democrats who have begun holding town hall meetings in Republican districts where Republican representatives have been reluctant to meet their constituents who are upset about budget cuts that threaten access to Social Security, Medicaid and federal food assistance.
Pocan focused on what President Dondald Trump (R) has called “the Big Beautiful Bill” that was recently passed by the House of Representatives, and which Pocan called “the worst bill I’ve ever seen introduced by anyone, by any political party.”
He chided Republican supporters for cutting Medicaid benefits for nearly 14 million Americans, raising the premiums for the Affordable Care Act (ACA), and cutting food assistance to 11 million mostly low-income children through Supplemental Nutrition Assistance Program (SNAP).
The Republican budget reconciliation package also extends tax cuts passed in 2017 for America’s top earners, resulting in a nearly $5 trillion national deficit over 10 years.
A May 20 Congressional Budget Office (CBO) analysis of the GOP budget bill projects it would increase the national deficit by $3.8 trillion and decrease Medicaid spending by $698 billion and SNAP spending by $267 billion.
A May 22 CBO projection notes the bill would reduce SNAP participation by “roughly 3.2 million people in an average month over the 2025–2034 period.”
There are different projections on how many people would experience a Medicaid cut, with estimates ranging from 7.5 to 10 million.
Van Orden sent out a release after Pocan’s appearance in Eau Claire:
“What Mr. Pocan is doing is absolutely despicable – continuing to fearmonger our vulnerable populations, including seniors, veterans, hungry children, individuals with disabilities and pregnant women. This bill protects Medicaid and SNAP for those most in need and prevents a 25% tax hike on Wisconsin families. Anyone telling you anything different, including Mr. Pocan, is lying to you.”
Van Orden also disputes the CBO’s analysis, stating that the CBO has been wrong in the past and tends to be overly critical of Republican-sponsored legislation.
“There are not cuts to Medicaid, Medicare, Social Security, veteran benefits, SNAP and WIC (Women, Infants and Children program) are not being cut,” Van Orden told a local TV station after the House passed the bill.
But Pocan said Van Orden has been corrected even by other Republicans who admit the bill would reduce spending on Medicaid.
“83% of the benefit goes to the top 1% of the people,” Pocan said of the tax cuts, “so they are taking from the pockets of pretty much everyone in this room and putting it into the pockets of Elon Musk and Donald Trumps and others.”
Pocan added that only 5% of the tax cuts in the bill will go to working people, including those who won’t have to pay taxes on tips, seniors and to offset interest payments on car loans. And, he noted, those cuts will sunset, while the much larger tax cuts for top-earners, which account for 83% of the cost of the bill, are permanent.
“The single largest cut to health care in American history is in this bill, 13.7 million people are estimated would lose access to health care because of the cuts to Medicaid,” Pocan said. “But what doesn’t get as much coverage is they also cut some of the premium assistance for the Affordable Care Act. So it’s a $700 billion cut to Medicaid, but also a $300 billion cut to the Affordable Care Act. We don’t even have the estimates of the numbers yet, but millions more will pay increased premiums.”
Pocan said Republicans have said the Medicaid cuts are really about setting work requirements in exchange for benefits and not a straight cut.
“Two-thirds of the people who get Medicaid are working poor,” Pocan said. While they shouldn’t be affected by the new work requirements, the red tape involved in proving their work history will help push people off Medicaid.
“It’s not about trying to have any accountability,” he said. “It’s to just make it harder for people to get health care.” Pocan pointed to a state work requirement for Medicaid recipients in Arkansas, where people who lost coverage were actually eligible for care. The work requirements did not boost employment, researchers found and many of those who lost coverage had trouble accessing the online reporting system.
Pocan also noted that the projected increase in the deficit under the House proposal would trigger a sequestration requirement, resulting in automatic cuts to Medicare of nearly $500 billion.
SNAP cuts would mean a loss of $314 million for Wisconsin.
Pocan also criticized Trump’s “on again, off again” practice of announcing tariffs, which had created a climate of uncertainty for businesses.
“Not only did Donald Trump not reduce costs like he promised in November, but the tariffs are actually a tax on all of us,” he said.
Pocan criticized Van Orden for not coming to town hall meetings to defend his vote for the Republican budget bill.
Van Orden has said he prefers telephone town halls where the meeting isn’t dominated by people he describes as leftwing critics, and he also has said that his family has received death threats and is vulnerable in an in-person setting.
Pocan acknowledged death threats should be taken seriously, but also stated he and many others in Congress have received death threats, and he criticized Van Orden’s telephone town halls for only allowing his supporters to talk.
Pocan also criticized Van Orden for going back on his promise never to cut Medicaid or reduce SNAP. Van Orden has claimed the bill doesn’t reduce Medicaid and that Medicaid and SNAP payments will continue as usual for recipients if they meet the new work requirements.
A registered nurse who attended the town hall in Eau Claire said many of her clients are on Medicaid and Medicare, with several living in nursing homes, and she asked what would happen to them if the House budget bill became law.
State Sen. Jeff Smith (D-Brunswick) who came to the town hall with Pocan, said approximately 55% of people in long-term care in Wisconsin are on Medicaid and if Medicaid funding is cut it will also impact the other 45-50% who have private insurance because facilities will close due to lack of funding.
Pocan also responded to questions about cuts to Social Security Administration staff, saying, “When you cut thousands of people who work for Social Security, you make it harder for people to get access to their money.”
Speaking more generally of federal cuts under Elon Musk’s Department of Government Efficiency, he added, “They fired the people who worked on avian flu, bird flu, which was affecting us greatly recently, and they had to rehire them at the Department of Health and Human Services.”
Pocan said he believed Trump won in November because the cost of living was high and noted that in other countries incumbents also lost because of a backlash caused by global inflation.
“So that was the No. 1 thing going for Donald Trump in November, but today it’s the No. 1 thing that’s taking him down the polls, because he said he would address it. He’s done nothing,” said Pocan.
Asked how Democrats could encourage younger people to vote, Pocan said, “The good news is younger people absolutely agree with more progressive public policy and not conservative policy.” But people “want to fight back, you want something to happen,” he added.
He encouraged Democratic leaders to hold more town hall meetings in Republican districts.
“We should be going into many more Republican districts,” he said.
Pocan also encouraged attendees to meet Van Orden whenever he is in Eau Claire and ask to talk to him directly, and invite the press to be there for the interaction.
He encouraged the crowd of 100-plus to become active.
“You happen to be in this very unique position of having a member that is in a purple district,” Pocan said of Van Orden, who won in 2024 by one of the smallest majorities for a Republican in Congress. He “could lose his seat if he doesn’t listen to you.”
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