WASHINGTON, D.C. — The Coalition for a Prosperous America (CPA) today highlighted key findings from the Congressional Budget Office’s (CBO) preliminary report on tariffs, which confirms CPA’s analysis that tariffs can raise significant government revenue while benefiting U.S. industries. The CBO’s findings show that the proposed 10/60 tariff package—an additional 10% global tariff and a 60% tariff on imports from China—would cut deficits by $2.7 trillion over the next decade with minimal impact on consumer prices and economic growth. Read CPA’s analysis of the CBO report here.
“The CBO summary of its forecast shows that claims of negative consequences of broad-based tariffs are grossly overblown,” said Jeff Ferry, Chief Economist at CPA. “The CBO has not come all the way to our side, but it is nevertheless a partial confirmation of our view of the US economy. Broad-based tariffs will generate economic growth, create jobs, and raise household incomes, with only a very minor one-time increase in consumer prices. In today’s world, tariffs are an essential tool for the US economy.”
The CBO projects that even with a decline in imports, the 10/60 tariff package would result in a significant reduction in the federal deficit. It forecasts a modest, one-time 1% increase in prices, with no additional inflationary effects after 2026, and an insignificant 0.6% reduction in GDP by 2034. These findings closely parallel CPA’s research, which has shown that a 10% global tariff would generate GDP growth of 2.86%, create 2.8 million jobs, and raise average household income by over $4,000.
However, CPA cautioned that the CBO’s reliance on the outdated GTAP economic model underestimates the growth effects of tariffs. The Minneapolis Federal Reserve found that the standard GTAP model has “essentially zero predictive accuracy.” The models used by groups like the Tax Foundation (i.e. equilibrium models) make similar assumptions about tariffs that the GTAP model makes.
“The CBO analysis ignores the proven benefits tariffs have on domestic production,” Ferry added. “The U.S. International Trade Commission’s own research found that tariffs substantially boost domestic output in every sector where they’re implemented. We need realistic economic models that reflect the dynamic benefits tariffs provide to the American economy.”
As public and policymaker support for tariffs continues to grow, CPA calls on Congress to adopt bold trade measures to reduce the deficit, protect U.S. industries, and ensure a prosperous future for American workers.
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