Trump's $200 billion tariff hit swells budget deficit to $2.1 trillion for 2026, CBO confirms

Key Points:

• The Congressional Budget Office (CBO) now projects the fiscal 2026 deficit will reach $2.1 trillion, up from $1.9 trillion in February, primarily due to a $250 billion shortfall in tariff and customs-duty revenue following the Supreme Court's invalidation of President Trump's tariff program.
• The Supreme Court ruling on February 20 struck down tariffs imposed under the International Emergency Economic Powers Act (IEEPA), forcing the administration to shift to alternative tariff authorities, which are expected to recover some but not all lost revenue.
• Federal spending remains close to prior projections, but revenue losses from tariffs have driven the deficit increase, with net customs-duty collections turning negative since May due to large refunds, including $100 billion refunded on invalidated IEEPA duties.
• Key entitlement programs and interest payments continue to drive spending growth, with Social Security, Medicare, Medicaid, and net interest on public debt all rising significantly, while corporate tax receipts fell 23% due to expanded deductions.
• Experts warn the growing deficit and rising national debt, now nearing $40 trillion, necessitate urgent bipartisan fiscal reforms, including setting deficit targets and forming commissions to address the nation's worsening fiscal outlook.