Tariffs have changed frequently throughout 2025. The Congressional Budget Office has regularly updated the Congress about how those changes affect projected tariff revenues. This blog post is the latest in that series.
As of November 15, we estimate that the effective tariff rate for goods imported into the United States is about 14 percentage points higher than the roughly 2.5 percent it was a year ago, measured by applying current tariff rates to 2024 trade flows. We now project that increases in tariffs implemented from January 6, 2025, to November 15, 2025, will decrease primary deficits (which exclude net outlays for interest) by $2.5 trillion over 11 years if the higher tariffs persist throughout the 2025–2035 period. By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by $0.5 trillion. In total, the tariff changes will reduce deficits by $3.0 trillion. Those estimates do not account for effects on the size of the economy. The additional budgetary effect of the economic changes will be incorporated in CBO's next set of economic and baseline budget projections that will be published in The Budget and Economic Outlook: 2026 to 2036.
Our current estimates are smaller than those from August (reflecting the effects of tariffs implemented between January 6 and August 19, 2025), which projected an 18 percentage point increase in the effective tariff rate, a $3.3 trillion decrease in primary deficits, and a $0.7 trillion reduction in interest outlays. Roughly two-thirds of the downward revisions result from adjustments to reflect new data. Modifications to tariffs, which on net lowered the effective tariff rate (although rates on certain products were higher in November than they were in August), also reduced the estimated effect on the deficit.
CBO's published baseline budget projections reflect the estimated effects of tariffs that are in place at the time the projections are set. We will continue to provide updates in response to changes in tariffs resulting from administrative actions or judicial decisions, including any changes stemming from the case argued before the Supreme Court earlier this month.
Changes to Tariff Policy From August 19 to November 15
Most of the tariffs that were in effect as of August 19, 2025—which are detailed in our August 22 blog post on the budgetary effects of tariffs—remain in effect. The largest changes in tariff policy that have occurred since August are the following:
- A reduction in the additional tariffs applied to goods from China,
- The introduction of additional tariffs on goods from India,
- A series of product-specific tariffs on certain vehicles and vehicle parts and certain lumber and derivative products, and
- A reduction of tariff rates for some goods from the European Union and Japan.
In early September, the Administration announced a list of products that would be exempt from certain recent tariff rate increases if foreign trading partners negotiated for their exemption. We have incorporated negotiated exemptions for those products—which include aircraft and parts, products intended for pharmaceutical applications, and natural resources not found or produced domestically—as they have been implemented. Additionally, our estimates reflect the exemption of certain agricultural products, consumer electronics, pharmaceutical products, and semiconductors from most new tariffs. Accounting for all announced and implemented exemptions, we estimate that more than a third of imports are unaffected by tariff rate increases from policies enacted from January 16, 2025, to November 15, 2025.
Changes to CBO's Tariff Models
We evaluate and improve our modeling methods by comparing our models' parameters and estimates with new data on imports, customs revenues, and import prices from the Census Bureau, Customs and Border Protection, the Bureau of Labor Statistics, and the Treasury. In response to new data, we made three changes to the modeling framework that underlies our tariff revenue projections.
- First, we increased the estimated share of imports from Canada and Mexico that can access lower or zero duty rates by complying with the United States–Mexico–Canada Agreement (USMCA). Recent data on imports and customs collections suggest that a larger share of imports from Canada and Mexico are claiming USMCA preferences than we had estimated on the basis of data from 2024.
- Second, we reduced our estimates of the value of steel and aluminum in goods that are subject to tariffs on steel and aluminum derivative products. Such tariffs are applied to the value of steel or aluminum in a product (rather than the value of the entire product), and that reduction reflects a more precise assessment of steel and aluminum content in those products.
- Third, we increased the projected share of tariff costs absorbed by foreign exporters. We had previously projected that foreign exporters would not reduce their prices to offset increased tariff rates. We now project that foreign exporters will reduce their prices by an amount equivalent to 5 percent of the increase in tariff rate, which is consistent with evidence from increases in tariff rates on China that were implemented in 2018 and 2019. As a result, the cost of imported goods for U.S. businesses and consumers rises by less than we had previously projected, leading to a smaller decline in imports. In turn, tariff revenue is higher over the 2025–2035 period than we had previously projected.
The first two changes narrow the applicability of certain tariffs and reduce our projections of tariff revenues over the 2025–2035 period. The third change increases our projections of such revenues over that period.
Other than those three changes, both the current and earlier estimates use the same methods to generate the projections of tariff revenues. Those methods account for a diversion of trade from countries and products facing high tariff rates to countries and products facing lower tariff rates.
Sources of Uncertainty
One source of uncertainty about these projections is that the Administration could change how tariff policies are administered. The projections incorporate the assumption that when tariffs are modified through administrative action, the modifications will continue permanently without changes. Additionally, the projections incorporate changes announced by the Administration after they are implemented, with no exemptions or exclusions beyond those currently specified publicly. If mechanisms for additional exemptions were implemented, the tariff duties collected could decline substantially.
Moreover, the United States has not implemented increases in tariffs of this size in many decades, so there is little empirical evidence to guide our estimates of their long-term effects. Consumers and businesses could be more or less responsive to increases in tariffs of this size, which would cause trade and revenues to diverge from projected amounts. Additionally, the authority used to impose some of the changes in tariffs has been challenged in court, and the Supreme Court is currently considering that challenge. We will update our estimates if tariffs change as a result of that challenge.
CBO will continue to assess how businesses and consumers respond to the tariff changes and will incorporate that information in future analyses.
Phillip L. Swagel is CBO's Director.