The Congressional Budget Office (CBO) has released a report on the impact of President Donald Trump's tariffs on the US economy. Here's a breakdown of the findings ¹ ² ³:

- Deficit Reduction: The CBO estimates that the tariffs will reduce federal deficits by $2.8 trillion over the next decade, primarily through increased customs revenue and lower interest payments on federal debt. This reduction comes from:

- Primary Deficit Reduction: $2.5 trillion

- Interest Payment Savings: $500 billion

- Economic Impact: However, the tariffs are expected to have negative effects on the economy, including:

- Slower Economic Growth: The CBO projects that the tariffs will slow down the US economy, with real GDP growth reduced by 0.06% each year.

- Increased Inflation: The tariffs will lead to higher prices for consumers, contributing to inflation.

- Reduced GDP: In a decade, real GDP is expected to be 0.6% lower than previously forecasted.

- Economic Drag: The CBO notes that the economic damage from the tariffs is expected to be modest, frontloaded, and mostly reversible. The trade leverage gained from the tariffs could potentially lead to better terms or agreements.

Overall, the CBO report suggests that while the tariffs will reduce the federal deficit, they will also have negative consequences for the US economy, including slower growth and higher inflation ¹ ² ⁴.

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