Changes in trade policy through July 31, 2026, result in projected total deficits that are $0.9 trillion larger over the 2027–2036 period (fiscal years) than they were in the Congressional Budget Office’s February 2026 baseline projections. That includes $0.7 trillion in larger primary deficits and $0.2 trillion in debt-service costs. Those increases are largely driven by the removal of tariffs imposed under the authority of the International Emergency Economic Powers Act (IEEPA) following the Supreme Court’s decision. The Administration imposed new tariffs after the decision, but they are projected to raise less revenue.
As reported earlier this month in the Monthly Budget Review, we now project that net customs revenues for fiscal year 2026 will be about $250 billion lower than we projected they would be in our February 2026 budget projections. Most of the $166 billion in revenue collected under IEEPA will be refunded in fiscal year 2026, which accounts for about half of the $250 billion change in projected net customs revenue.
Changes to U.S. Tariffs Since February 2026
The projected revenues reported in February in The Budget and Economic Outlook: 2026 to 2036 reflected the assumption that the tariff rates implemented through executive action as of November 2025 would remain in place throughout the projection period. Since then, tariff policy has changed many times. The largest changes were the following:
- On February 20, 2026, the Supreme Court ruled that the Administration could not impose tariffs under IEEPA authority. The Administration terminated those tariffs shortly thereafter and began issuing refunds in May.
- On February 24, 2026, the Administration temporarily imposed a 10 percent tariff (under section 122 of the Trade Act of 1974) on imports of goods from all countries. Those tariffs expired on July 24, 2026.
- On July 24, 2026, the U.S. Trade Representative imposed 10 to 12.5 percent tariffs (under section 301 of the Trade Act of 1974) on imports of goods from more than 80 countries.
Our current projections also reflect other policy changes, including the imposition of tariffs on imports of goods from Brazil and modifications to tariffs on steel, aluminum, and copper products. They do not include the effects of announced policy changes not in effect as of July 31, such as potential changes to tariffs on certain imports from Canada.
We estimate that the effective tariff rate (ETR) is now 10 percent, 5 percentage points lower than our estimate for November 2025. The ETR has changed several times in recent years. We estimated that the ETR in 2024 was 2 percent and that it increased to 15 percent by November 2025. Without IEEPA tariffs or section 122 tariffs, the ETR in February 2026 would have been about 7 percent. (The ETR is calculated as an import-weighted average tariff rate based on imports in 2024, which excludes responses to the changes in tariffs beginning in 2025.)
Sources of Uncertainty
Our tariff projections continue to be uncertain. The United States has not implemented changes 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 changes in tariffs of this size, which would cause trade and revenues to diverge from projected amounts. Moreover, the Administration frequently changes tariff policies. Tariff revenue could also decline substantially if additional exemptions were implemented.
Phillip L. Swagel is CBO's Director.