The Congressional Budget Office now projects that changes in trade policy leave total federal deficits $0.9 trillion larger over the 2027 to 2036 period than it projected in February. The estimate comes from a budget office update on tariffs, and it moves the fiscal picture in the opposite direction from the one many tariff debates assume. The main driver is the loss of tariffs imposed under emergency powers, not the tariffs that remain.
What CBO’s August tariff update says about 2027 to 2036
In its August 20 publication, “CBO’s Updated Budgetary Projections of Tariffs as of July 31, 2026,” the agency states that changes in trade policy through July 31, 2026, result in projected total deficits that are $0.9 trillion larger over the 2027-2036 period than in its February 2026 baseline projections. The measure is a revision against that earlier baseline, not a standalone ten-year total for tariffs.
The figure is a deficit increase, not a revenue figure, and it covers a window that begins in fiscal 2027. It is a projection built on policy in place through the end of July, so later changes to tariff rates or court rulings would move it.
Why removing IEEPA tariffs raises the deficit projection
CBO says the increases are largely driven by the removal of tariffs imposed under the International Emergency Economic Powers Act, known as IEEPA, following the Supreme Court’s decision. CBO ties the larger deficit projection to that removal, and the comparison point is the agency’s own February 2026 baseline, so the $0.9 trillion measures how far the outlook has moved in roughly six months.
The wording matters for how the number is read. The $0.9 trillion is not CBO scoring tariff policy as a spending program or as a cost in itself. It is the budget office’s estimate of how deficits differ from its February baseline after trade-policy changes through July 31, with the IEEPA removal named as the largest driver.
The $0.7 trillion primary deficit and $0.2 trillion debt service split
The agency breaks the total into two parts. It includes $0.7 trillion in larger primary deficits, which exclude interest, and $0.2 trillion in debt-service costs. The second piece reflects the cost of financing the extra borrowing: larger deficits mean more federal borrowing, and the added debt carries interest costs.
The two parts add up to the $0.9 trillion headline figure. CBO reports both in tenths of a trillion, so the split is approximate, and the interest share is about a fifth of the total.
The $166 billion in IEEPA refunds and fiscal 2026 customs revenue
The near-term effect is sharper than the ten-year average suggests. CBO now projects that net customs revenues for fiscal year 2026 will be about $250 billion lower than it projected in February. It adds that most of the $166 billion collected under IEEPA will be refunded in fiscal 2026, which accounts for about half of that $250 billion change.
The refunds therefore explain only about half of the fiscal 2026 shortfall. CBO’s summary does not break out the other half in the passage reviewed here, and it describes the $250 billion as a change in net customs revenue relative to the February projection, not as a fresh tariff rate.
CBO’s monthly budget review for fiscal 2026 to date
CBO’s separate monthly review, published September 9, offers a look at how the year is running. According to its August monthly budget review, the fiscal 2026 deficit to date stands at $1.967 trillion, and customs duties collected so far in the fiscal year total $167 billion. Those are year-to-date tallies of actual flows, a different measure from the ten-year projection, so the two should not be compared line for line.
CBO labels the figure a projection, and projections of this kind change as laws, court rulings and collections change. As of the August 20 update, the budget office’s own statement of the scale is $0.9 trillion in larger deficits over 2027 to 2036, of which $0.2 trillion is interest on the added debt.
How to read the $0.9 trillion without mixing up the measures
Three details separate this number from others in circulation. The window is 2027 to 2036, not 2026 to 2035. The baseline is CBO’s February 2026 projection, so the figure is a revision rather than the full ten-year budgetary effect of all tariffs. And the sign is positive for deficits: the revision makes them larger, with the IEEPA removal after the Supreme Court decision as the stated driver.
The fiscal 2026 numbers carry a separate scope. The $250 billion is a one-year change in net customs revenue, and the $166 billion is the IEEPA revenue CBO says will mostly be refunded within that year. Neither is a ten-year figure, and neither is added on top of the $0.9 trillion. Readers comparing coverage should check which of these measures a given headline is quoting, since the window, the baseline and the fiscal-year scope each change the number.
Property-tax relief for older homeowners and renters
Older homeowners and renters on fixed incomes often miss local tax relief programs because the rules sit in different state and county offices. The kit lays out the programs side by side so an application can be planned in one sitting.
The Senior Property Tax & Home-Cost Relief Kit is an 11-page kit that covers the 5 kinds of property-tax relief and includes an application log and renewal calendar, so each filing and its renewal date can be tracked in one place.
Click here to get The Senior Property Tax & Home-Cost Relief Kit →
AI assistance was used in producing this article, which was reviewed against the official documents it cites.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
