Fiscal Hardliners Need To Understand Tariff Revenues
Those who are preparing to make a goal line stand in the name of deficit discipline against the President’s Big Beautiful Bill (BBB) need to understand that the budget game has changed dramatically. The idea that the BBB blows a hole in the budget leading to a cascade of borrowing is just plain wrong. These fiscal stalwarts need to get it through their thick heads that Trump’s trade tariffs are going to more than pay for any additional spending in the bill.
Already, this fiscal year, federal revenues from the new tariffs are running $100 billion above estimates. And most projections are that they will eventually yield $300 to $400 billion in extra revenues. And that figure does not take account of new trade deals and tariffs Trump will announce in the weeks to come.
With the EU, Canada, and Mexico likely to sign trade deals, the likelihood is that the president will have almost a trillion in new revenue coming in, Axios reports that “The $3 trillion in additional revenue [from Trump’s tariffs] more than wipes out that claim by CBO that the one Big Beautiful Bill will add $2.4 trillion to the national debt.”
Trump’s tariffs mean no deficit; no debt. Fiscal hawks are not fully counting tariff revenues because many of the key trade deals are still being negotiated, but they will come in. Of that we may be sure. Torsten Slok, chief economist for Apollo Global Management, put it best when he noted that “This [extending the reciprocal tariff deadline] would seem like a victory for the world and yet would produce $400 billion of annual revenue for U.S. taxpayers,” Slok wrote. “Trade partners will be happy with only 10% tariffs, and U.S. tax revenue will go up. Maybe the administration has outsmarted all of us.”
Indeed it has but fiscal hawks like Texas’ Congressman Chip Roy or Maryland’s Andy Harris have yet to factor in the new reality of tariff revenues into their gloomy assessment of the BBB. Before they cast aspersions on this wonderful bill, they need to update their fiscal conservatism and wake up and smell the roses.
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