Philip Swagel, director of the Congressional Budget Office, said Monday that President Donald Trump’s tariffs appear to have boosted inflation higher than CBO analysts had initially expected.
His views differ from those of Wall Street analysts, many of whom are preparing for a tariff-driven price hike, but have yet to see it happen.
Speaking about CNBC’s “Squawk Box,” Swagel said CBO analysis has shown that the economy has been weakening since January and is expected to put downward pressure on inflation.
Swagel also shared his office’s long-term views on the impact of Trump’s tariffs. The CBO hopes to reduce the US budget deficit by $4 trillion over the next decade by pouring money into federal funding.
“So, $3.3 trillion in revenue, then $700 billion in the avoided debt costs,” he said. “That would be a big reversal in terms of deficit.”
Trump’s tariffs face an uncertain future. The Supreme Court is scheduled to hear oral debate in early November after the Trump administration appealed a lower court ruling that found the president exceeded his authority.
Swagel said the outcome of the Supreme Court’s tariff case was “one of the important uncertainties in the economy.”
However, according to the latest CBO report, that uncertainty can disappear over time.
“The impact of policy uncertainty will disappear by the end of 2027 and we will return investments if there is no trade policy uncertainty,” the September CBO analysis stated.
