President Donald Trump's Tariffs are working

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   Readmikenowposted 2 days ago

   From the left-leaning Fortune Magazine.
   
   "Trump is bringing in enough revenue from tariffs to cut deficits by $4 trillion over the next decade, CBO says
   
   President Donald Trump’s hike in tariffs is projected to generate enough revenue to cut federal deficits by $4 trillion over the next decade, according to the latest analysis by the Congressional Budget Office (CBO). The nonpartisan agency said it had updated its estimates of tariff revenues as part of the development of the short-term economic forecast covering 2025 to 2028, to be published on Sept. 12.
   
   The CBO report found that increased tariffs—many targeting imports from China, Mexico, Canada, and the European Union as well as automobiles, steel, and other goods—have raised effective tariff rates by about 18 percentage points compared to last year. If these rates remain, primary deficits would shrink by $3.3 trillion and interest payments would fall by another $700 billion, bringing the total deficit reduction to $4 trillion over 10 years.
   
   Impact of tariffs on deficit
   Higher tariff revenues mean less need for federal borrowing, resulting in significant savings on national debt interest payments. This marks a substantial revision from the CBO’s June estimates following recent hikes in tariff rates and broader coverage across key imports, when the agency projected a $2.5 trillion decrease in primary deficits and $500 billion reduction in interest outlays in a report that examined the effects of the tariffs implemented between Jan. 6 and May 13, 2025. The CBO said it used the same methods to generate the projections, mainly based on data from the Census Bureau, Customs and Border Protection, and the Treasury.
   
   The study notes that tariff revenue could partially offset deficits caused by new tax cuts and spending bills, such as the One Big Beautiful Bill Act, which is expected to raise deficits by $3.4 trillion, also according to the CBO. However, legal challenges and evolving trade negotiations may impact future tariff-related revenues, the CBO cautioned.
   
   Wider economic context
   The federal debt currently stands at about $37 trillion, and analysts remain concerned about upward pressures on interest rates and borrowing costs due to rising debt levels. Lawmakers are also facing a government funding deadline at the end of September, which places added scrutiny on deficit management in upcoming fiscal debates.
   
   Separately, the Committee for a Responsible Federal Budget (CRFB), a nonpartisan budget watchdog that sits outside the government, has calculated that Trump’s tariff regime, if kept permanent, could reduce the deficit by up to $2.8 trillion in the next decade. The CRFB called the revenue being generated by the tariffs both “meaningful” and “significant.”
   
   
   https://finance.yahoo.com/news/trump-br … 40351.html

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      tsmogposted 2 days agoin reply to this

      Interesting! Seems significant headway is being made. I just have two questions:
      
      1. Who pays the tariffs? I understand they’re collected at the border, but how far downstream does that cost ripple—importers, retailers, consumers?
      
      2. How does equilibrium enter into the formula? If tariffs shift prices and supply chains, what counterbalances emerge—domestic production, inflationary pressures, or retaliatory trade moves?
      
      Curious how folks see the long-term dance between revenue and resilience.

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         Sharlee01posted 2 days agoin reply to this

         I will bite --- 
         
         Answering these questions using the past as context, it’s important to recognize that Trump’s tariff disputes are being handled very differently than any trade conflicts in our history. One can’t simply look at a single trade war and assume the precedent will occur again, because there are too many variables at play and the way this tariff war is being conducted is unique. While history can provide some context, it doesn’t measure negotiating skills or allow for direct comparisons between one administration and another. Each situation is distinct, and Trump’s approach, timing, and leverage in these disputes make it difficult to predict outcomes based solely on past examples.
         
         I will answer these questions based on past history and what could be called patterns. First, who pays the tariffs? While they’re collected at the border, the cost ripples downstream in different ways, importers often absorb part of it, some of the increase gets passed to retailers, and ultimately consumers can see higher prices depending on how companies adjust.
         
         In my view, equilibrium plays a key role: when tariffs shift prices and supply chains, counterbalances can emerge through domestic production ramping up, inflationary pressures adjusting demand, or retaliatory trade measures from other countries. Looking at the long-term “dance” between revenue and resilience, patterns from history show that the effects aren’t uniform, and no single past trade war perfectly predicts the outcomes here, because of the unique way these disputes are being conducted today.
         
         I think even J. Powell has come to not depend on the history of what could occur, but has occurred.   Powell’s recent Jackson Hole speech was really interesting. He pointed out that tariffs have caused some visible price increases, but he sees these as temporary and not a big drag on the economy. Basically, he’s signaling that these one-off price bumps aren’t going to trigger persistent inflation. On top of that, his comments have markets thinking the Fed may cut interest rates in September. Several major banks are now expecting a quarter-point rate cut, and CME data shows there’s roughly an 87% chance traders see it happening. So, despite the tariff chatter, the overall economy looks pretty resilient, and Powell seems comfortable letting the Fed take a softer approach if needed.

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            tsmogposted 2 days agoin reply to this

            Well stated!
            
            As for me . . .
            
            Tariffs may be the lever, but equilibrium is the fulcrum. Systems bend, stretch, and compensate—until the new normal looks suspiciously like the old. I’m just here watching entropy whisper its forecasts while chaos scribbles in the margins.

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   Readmikenowposted 2 days ago

   Even Federal Reserve Jerome Powell, who is NO fan of President Donald Trump is forced to admit that the tariffs are working.  I'm sure that crushed him to admit it.
   
   "Last Friday in Jackson Hole, Federal Reserve Chairman Jay Powell finally – and grudgingly – admitted what the Trump team has been saying all along: tariffs don’t fuel inflation.
   
   At most, tariffs create a one-time adjustment in prices, not the kind of runaway spiral that demands punishing rate hikes. And even that one-time bump may be negligible if, as we have long argued, foreign exporters – not American consumers – shoulder most or all of the burden.
   
   The implication is clear: whether the impact is zero or merely a one-time step-up in prices, there is absolutely no justification for the Fed to hide behind "tariff uncertainty" as an excuse for overly restrictive interest-rate policy.
   
   This really is a historic epiphany from a Fed chair who has long misunderstood the power of Trumpnomics – the four beautiful horsemen of economic growth and price stability: tax cuts, deregulation, strategic energy dominance and fair trade.
   
   Trumpnomics delivered both strong economic growth and price stability in the first term. It is delivering again in the second.
   
   Markets immediately recognized the punch of Powell’s tariff epiphany. The Dow smashed through its 45,000 ceiling – and I remain on record predicting a march to 50,000. Yields on the 10- and 30-year Treasuries tumbled, driving bond prices sharply higher. 
   
   Clearly, Wall Street got Powell’s dovish tariff message: the door to a September rate cut is now wide open. The only suspense is whether Powell will nibble with 25 basis points – or cut far more boldly.
   
   But here’s the lingering fear, from the West Wing to Wall Street: While Powell may now grasp that tariffs don’t fuel persistent inflation, he still doesn’t understand who pays.
   
   Memo to Jay: Every one of America’s major trading partners – the same countries driving our $1 trillion annual trade deficit – is deeply dependent on access to the U.S. market. When Trump slaps on tariffs, it is their exporters, not our consumers, who shoulder the burden. Without U.S. demand, their economies falter – so pay the tariff piper our trading partners must.
   
   That’s why in Trump’s first term, despite all the handwringing from the "Panicans" about looming inflation, tariffs on everything from steel and aluminum to China produced the opposite: robust growth with price stability.
   
   If Powell clings to timidity and keeps rates overly restrictive, he will continue inflicting enormous harm on the U.S. economy. American families are already being crushed by the world’s highest mortgage rates, small businesses can’t get affordable credit, and exporters face a dollar so overvalued it prices them out of global markets.
   
   Global rate spreads underscore just how out of touch the Fed is with the rest of the world. The European Central Bank’s deposit facility sits at 2%. The Bank of Japan holds near 0.5%. China runs its seven-day repo at 1.4%. Against that backdrop, the Fed’s 4.25%–4.50% target range remains a glaring outlier – more than 200 basis points above Europe, nearly 400 above Japan, and triple China.
   
   ......And for what? Disinflation is already here. Headline CPI is back near 3% year-on-year. The Fed’s preferred PCE measure runs closer to 2.5% – essentially on target. Energy prices are subdued, supply chains have healed, and wage pressures are stabilizing. Yet U.S. real (inflation-adjusted) rates now stand higher than at any point in nearly two decades – a textbook case of over-tightening.
   
   https://www.foxnews.com/opinion/what-fe … e-epiphany

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   Readmikenowposted 46 hours ago

   I suppose it is painful for the left to realize that once more President Donald Trump was right and the left was wrong.  There are lots of "economic experts" that were wrong about the tariffs.
   
   It's just like securing the border.  democrats said it couldn't be done and President Donald Trump did it.
   
   You have to ask yourself when will they ever learn.

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      Willowarborposted 46 hours agoin reply to this

      You enjoy paying more for absolutely everything?

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         Readmikenowposted 33 hours agoin reply to this

         I'm enjoying knowing the national debt is being decreased by Trillions.
         
         This will add to economic stability in the present and future.
         
         From an economic standpoint that is EXTREMELY important for future generations of Americans.

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            Sharlee01posted 32 hours agoin reply to this

            So agree...

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         Sharlee01posted 32 hours agoin reply to this

         This all came to play under Biden. It may take years to fix, as asset prices rarely come down once they have gone up. Hopefully, Trump can bring some prices down.  I think you forgot when the prices on just about everything went up. Actually, it's good to see the tariff war has not blown them sky high, and many predicted it would. Even the Fed agrees with that sentiment.

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            Willowarborposted 32 hours agoin reply to this

            Higher prices during the Biden administration came due to covid and supply chain issues.... Higher prices now?..... TRUMP'S TARIFFS

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   Willowarborposted 31 hours ago

   Who pays the tariffs?? 2026 is looking fantastic for Dems...
   https://x.com/OfTheBraveUSA/status/1961075626548338767

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   Credence2posted 30 hours ago

   As for me, I am not allowing any space for excuses, giving Trump more time or some elaborate explanation explaining why inflation is still a concern. The guy said that he would reverse it, and I want results not excuses. For the sake of Trump’s political viability, his programs had better bring inflation DOWN now because is that not what he promised or boasted? So, my truncheon awaits if he fails……

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   Willowarborposted 26 hours ago

   Thanks to tariffs (esp re: Canada), US aluminium prices are now roughly 50% higher than in Europe & Japan, thus putting US manufacturers at a competitive disadvantage....
   
   Hell of an  industrial strategy.
   
   
   
   A bold strategy: 'protect' American manufacturing by making it pay 50% more for raw materials than its global rivals. It’s less an industrial policy and more of an industrial shakedown.
   
   The admin doubled down on June 4 with 50% tariffs, then expanded them on Aug 19 to 407 more products, ignoring warnings from Tesla that the US lacks domestic capacity. The result? July's PPI data showed metalwork prices up 9.2% year over year...This isn't protection; it's a tax on Americans.
   
   This isn't building up America. It's building a stage for political theater, and our own industries are paying the price of admission.

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