國(guó)會(huì)預(yù)算辦公室-提高關(guān)稅的說(shuō)明性政策的影響（英）

CONGRESSIONALBUDGETOFFICEPhillipL.Swagel,Director

U.S.Congress

Washington,DC20515

HonorableChuckSchumer

MajorityLeader

UnitedStatesSenate

Washington,DC20510

December18,2024

HonorableSheldonWhitehouseChairman

CommitteeontheBudgetUnitedStatesSenate

Washington,DC20510

HonorableRonWydenChairman

CommitteeonFinanceUnitedStatesSenate

Washington,DC20510

Re:EffectsofIllustrativePoliciesThatWouldIncreaseTariffs

DearLeaderSchumer,ChairmanWhitehouse,andChairmanWyden:

Youaskedaboutthebudgetary,economic,anddistributionaleffectsof

policiesthatwouldraisetariffratesongoodsimportedintotheUnited

States.Specifically,youaskedtheCongressionalBudgetOfficetoestimatetheeffectsofpermanentlyincreasingtheexistingratesofdutyonimportsfromallcountriesbytheequivalentof10percentofthevalueofgoodsandtheeffectsofpermanentlyincreasingtheexistingratesofdutyonimportsfromChinaby60percentofthevalueofgoods.YoualsoaskedCBOto

estimatetheeffectsofcombiningthosetwopolicies—a60percenttariffonimportsfromChinaanda10percenttariffonimportsfromtherestoftheworld.Ineachcase,theincreasedtariffswouldapplytoallgoodsimportedafterDecember31,2024,includingimportsthatarecurrentlysubjecttoa

zeropercentdutyrateandimportsfrompartnersincurrenttradeagreements.

Iamwritingwithourpreliminaryassessmentoftheeffectsofhighertariffsunderthosepolicies.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page2

BudgetaryEffects

CBOestimatesthateachofthepolicieswouldincreasefederalreceipts

fromcustomsduties.ThepoliciesalsowouldreduceU.S.importsand,

consequently,reducecustomsuserfees.Thosefeesarerecordedinthe

budgetasoffsettingreceipts(thatis,negativeoutlays).Thus,thereductioninsuchfeeswouldresultinasmallincreaseinfederaloutlays.Thenet

resultofthosetwoeffectswouldbeadecreaseinthedeficit.

Underthelong-standingconventionofholdingthesizeoftheeconomy

unchangedwhenestimatingbudgeteffects,CBOestimatesthatthepolicieswouldhavethefollowingeffectsoverfiscalyears2025to2034:

?Auniformincreaseintariffsof10percentofthevalueofgoodswoulddecreasedeficitsby$2.2trillion.

?Anincreaseintariffsof60percentofthevalueofallgoodsimportedfromChinawoulddecreasedeficitsby$0.8trillion.

?Thecombinationofauniformincreaseintariffsof10percentplusanadditional50percentongoodsimportedfromChinawould

decreasedeficitsby$2.9trillion.

UndertherulesoftheHouseofRepresentatives,thosepolicieswouldbeconsideredmajorlegislation.Whenpracticable,estimatesofthecostofmajorlegislationmustincorporatethebudgetaryeffectsofchangesin

economicoutput,employment,capitalstock,andothermacroeconomicvariables.Afterincorporatingthoseeconomiceffects,estimatesofthebudgetaryeffectsofthepoliciesoverfiscalyears2025to2034areas

follows:

?Auniformincreaseintariffsof10percentofthevalueofgoodswoulddecreasedeficitsby$2.1trillion.

?Anincreaseintariffsof60percentofthevalueofallgoodsimportedfromChinawoulddecreasedeficitsby$0.7trillion.

?Thecombinationofauniformincreaseintariffsof10percentplusanadditional50percentongoodsimportedfromChinawould

decreasedeficitsby$2.7trillion.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page3

ThoseestimatesarepreliminaryandarerelativetoCBO’seconomicand

budgetbaselineprojectionsfromJune2024.

1

Thereductionindeficits

wouldresultalmostentirelyfromdecreasesinprimarydeficits(thatis,

deficitsexcludingnetoutlaysforinterestonthepublicdebt).TheestimatesreflectCBO’sexpectationthatanincreaseintariffsbytheUnitedStates

wouldpromptothercountriestoretaliatewithequivalenttariffsonexportsfromtheUnitedStates.

EconomicEffects

CBOexpectsthattheincreasesintariffsonU.S.importsandmatching

tariffsimposedbytradingpartnersonU.S.exportsinretaliationwould

reducethesizeoftheeconomyinrelationtoCBO’sbaselineprojections.CBOfurtherexpectsthattheincreasesintariffswouldmakeconsumer

goodsandcapitalgoods(physicalassetsthatbusinessesusetoproducegoodsandservices)moreexpensive.Thoseincreasesincostswouldputupwardpressureoninflationoverthefirstfewyearsinwhichthetariffswereinplace.

EffectsontheSizeoftheEconomy.TheproposedchangesintariffswouldaffectU.S.economicactivityinseveralways:

?Theywouldmakeconsumergoodsandcapitalgoodsmoreexpensive,therebyreducingthepurchasingpowerofU.S.consumersandbusinesses.

?Theywouldincreasebusinesses’uncertaintyaboutfuturebarrierstotradeandwouldreducereturnsonnewinvestments,especiallyfor

businessesthatuseimportedgoodsintheirproductionprocess.Asaresult,someU.S.businesseswoulddelayorforgonewinvestments.Inaddition,byincreasingthecostofoperations,tariffsmight

encouragebusinessestomakecostlyadjustmentstotheirsupplychains.

?Theywouldreduceproductivitybylimitingcompetitionfrom

importsandcausingresourcestobeusedlessefficientlythantheyotherwisewouldhavebeenused.

1CongressionalBudgetOffice,AnUpdatetotheBudgetandEconomicOutlook:2024to2034(June2024),

/publication/60039.

FormoreinformationabouthowCBOprojectstariffrevenues,seeCongressionalBudgetOffice,“HowCBOProjectsTariffRevenues”

(October2024),

/publication/606926.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page4

?TheywouldpromptretaliatorytariffsbyU.S.tradingpartners,

whichwouldreduceU.S.exportsbymakingthemmoreexpensiveforforeignpurchasers.

AllofthoseeffectswouldlowerU.S.output.Intheotherdirection,U.S.consumersandbusinesseswouldreplacecertainimportedgoodswith

goodsproducedintheUnitedStates,whichwouldoffsetsomeofthatdeclineinoutput.

Theincreaseindutiescollectedfromthehighertariffswouldalsoreducethebudgetdeficit.Theresultingreductioninfederalborrowingwould

increasethefundsavailableforprivateinvestment,therebyincreasing

outputandoffsettingasignificantportionoftheoutput-reducingeffects

describedabove.Thateffectwouldbestrongestforthetwopoliciesthat

involveauniformincreaseintariffsof10percentofthevalueofgoods.

Forbothofthosepolicies,thereductioninreal(inflation-adjusted)outputbeforeaccountingforthateffectisnearlytwiceaslargeastheneteffect

reportedbelow.Inotherwords,forthosetwopolicies,theincreaseinthefundsavailablefordomesticinvestmentresultingfromlowerbudget

deficitsprovidesasubstantialoffsettotheagency’sestimateofhowmuchthosetariffsreducerealoutput.

CBOestimatesthatonnet,thepolicieswouldhavethefollowingeffectsonrealgrossdomesticproduct(GDP)in2034:

?Auniformincreaseintariffsof10percentofthevalueofgoodswoulddecreaserealGDPby0.3percent.

?Anincreaseintariffsof60percentofthevalueofallgoods

importedfromChinawoulddecreaserealGDPby0.3percent.

?Thecombinationofauniformincreaseintariffsof10percentplusanadditional50percentongoodsimportedfromChinawould

decreaserealGDPby0.6percent.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page5

Thoseestimatesoftheeffectsofthechangesintariffsonrealoutputarewithintherangeofestimatesfromothereconomicanalyses.

2

EffectsonPrices.InCBO’sassessment,thetariffpoliciesandthe

associatedretaliationbyU.S.tradingpartnerswouldleadtoincreasesinconsumerprices.Thechangesintariffswouldraisethecostofimportedgoods.Pricesforforeignanddomesticsubstituteswouldalsoriseas

consumersandbusinessesreplacedimportsthatweresubjecttotariffswiththosesubstitutes.Inaddition,tariffsoninputsusedbydomesticbusinesseswouldleadtohigherpricesforthegoodsandservicesthattheysell.

Thechangesintariffswouldpartiallyoffsetthatupwardpressureon

domesticpricesintwoways.First,thechangeswouldcausethevalueofthedollartoriseinforeignexchangemarkets,whichwoulddampentheincreaseinthecostofimportedgoodsandreducethecostofsome

importedservices.Forexample,astrongerdollarwouldreducethepriceof

foreigntravel.Second,retaliatorytariffswoulddrivedownthepricesofsomedomesticallyproducedgoodsinexport-orientedindustries.In

particular,byreducingforeigndemandforagriculturalexports,retaliatorytariffswouldleadtolowerpricesforcertainfoodproducts.

CBOestimatesthatonnet,by2026,thepolicieswouldhavethefollowingeffectsonpricesasmeasuredbythepriceindexforpersonalconsumptionexpenditures(PCE):

?Auniformincreaseintariffsof10percentofthevalueofgoodswouldincreasethelevelofthePCEpriceindexbyroughly

0.6percent.

2Forexample,seeEricaYork,“RevenueEstimatesofTrump’sUniversalBaselineTariffs”(TaxFoundation,blogentry,November6,2024),

/3f377cst;

TheBudgetLab,Fiscal,Macroeconomic,andPriceEstimatesofTariffsUnderBothNon-RetaliationandRetaliation

Scenarios(October16,2024),

/8ydenrb5;

InternationalMonetaryFund,WorldEconomicOutlook:PolicyPivot,RisingThreats(October2024),Box1.2,

/52vthpzm;

WarwickMcKibbin,MeganHogan,andMarcusNoland,The

InternationalEconomicImplicationsofaSecondTrumpPresidency,WorkingPaper24-20

(PetersonInstituteofInternationalEconomics,September2024),

/yd8hdkfj;

CommitteeforaResponsibleFederalBudget,“DonaldTrump’s60%TariffonChineseImports”(blogentry,April10,2024),

/4ry8cw7z;

andCommitteeforaResponsible

FederalBudget,“DonaldTrump’sUniversalBaselineTariff”(blogentry,September11,2023),

/3f29zevb.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page6

?Anincreaseintariffsof60percentofthevalueofallgoods

importedfromChinawouldincreasethelevelofthePCEpriceindexbyroughly0.4percent.

?Thecombinationofauniformincreaseintariffsof10percentandanadditional50percentongoodsimportedfromChinawould

increasethelevelofthePCEpriceindexbyroughly1percent.

CBOexpectsthatafter2026,thetariffswouldnothaveadditional

significanteffectsonprices.

DistributionalEffects

Thetariffswouldreduceaveragerealincomebydecreasingaggregate

outputandraisingprices,buttheeffectsonincomewouldnotbethesameforallhouseholds.Theeffectonincomefromchangesinoutputwould

dependinpartontheindustriesinwhichworkersindifferenthouseholds

wereemployed.Industriesthatproducegoodsthatcompetewithimports

wouldprobablyexpand,whereasindustriesthatchieflyproduceexportsorsourcealargeshareoftheirproductioninputsfromabroadwouldprobablycontract.Workersinexpandingindustriesmayseetheirincomegrow,andworkersincontractingindustrieswouldprobablyseetheirincomedecline.

Theextenttowhichchangesinpricesaffectedhouseholds'purchasing

powerwouldalsovary.Tariffstendtoputmoreupwardpressureonthe

pricesofgoodsthanonthepricesofservices.Becausehouseholdsatthelowerendoftheincomedistributionspendagreatershareoftheirincomeongoods,theywouldexperiencethelargestdeclinesinpurchasingpower.

CBOisstillevaluatinghowhigherpricesfromtariffswouldaffecthouseholdsacrosstheincomedistribution.

Finally,theeffectsofthetariffsonhouseholdswoulddependoneach

household’slevelofwealthandthetypesofassetstheyhold.Thedollar

valueofU.S.holdingsofforeignassetswouldlikelydecreasebecause

changesintariffswouldincreasethevalueofthedollarinforeignexchangemarkets.ThatreductioninU.S.wealthwouldlikelybeconcentratedatthetopendoftheincomedistribution.

3

3Foradetaileddiscussion,seeDorianCarloni,HowNominalForeignCurrencyDepreciationAgainsttheU.S.DollarAffectsU.S.Wealth,WorkingPaper2018-05(CongressionalBudgetOffice,June2018),

/publication/53931.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page7

BasisoftheEstimates

Toestimatetheeffectsofchangesintariffrates,CBOfirstcollectsdataon

currentimportsofproductsthatwouldbeaffectedbythenewrates.Next,

theagencyusesitsmacroeconomicforecastofimportstoprojectimportsofthoseproductsundercurrentlaw.Then,CBOestimateshowU.S.trade

flowswouldrespondtochangesintariffratesbyusingelasticitiesdrawn

fromempiricalresearchthatdescribethesensitivityofimportflowsto

changesintariffratesovertime.

4

Aftercalculatingtheeffectoftariffsonimports,theagencyusesthenewtariffratestoestimatefuturerevenues.

Thatestimateofrevenuesisthenreducedtoaccountforthechangesin

incomeandpayrolltaxesthatareprojectedtoresult.

5

Finally,theestimatedrevenuesunderthenewtariffratesarecomparedwithrevenuesprojected

undercurrentlaw.

Toestimatetheeffectsofhighertariffsonoutput,investment,and

productivityoverthenextdecade,CBOfurtherassessedhowthetariffswouldchangethecostsofproductionforbusinesses,theincentivesfor

thosebusinessestoinvestinnewcapital,andtheefficiencywithwhich

productiveresourcesareallocatedacrossindustriesbyusingtheGlobalTradeAnalysisProject(GTAP)model.

6

Theagencyalsoaccountedforhowthosetariffswouldreducefederalborrowingand,asaresult,wouldincreasetheresourcesavailableforprivateinvestment.Inaddition,the

estimatesreflecthowthetariffswouldaltertheoveralldemandforgoodsandservicesintheshortterm.

CBO’sestimatesoftheeconomiceffectsoftariffsalsoreflecthowtariffs

wouldaffectthepricesconsumersandbusinessespayforgoodsand

services.Toestimatepricechanges,theagencytranslateschangesin

productioncostsacrossindustriesintochangesinthepricesofgoodsandservices,accountingforindustries’dependenceononeanother.

7

(Agivenindustry’sproductusesotherindustries’productsasinputs;thepriceofthe

4ChristophE.Boehm,AndreiA.Levchenko,andNityaPandalai-Nayar,“TheLongandShort(Run)ofTradeElasticities,”AmericanEconomicReview,vol.113,no.4(April2023),pp.861–905,

/10.1257/aer.20210225.

5CongressionalBudgetOffice,CBO’sUseoftheIncomeandPayrollTaxOffsetinItsBudgetProjectionsandCostEstimates(October2022),

/publication/58421.

6FormoreinformationabouttheGTAPmodel,seeErwinL.Corongandothers,“TheStandardGTAPModel,Version7,”JournalofGlobalEconomicAnalysis,vol.2,no.1(2017),pp.1–119,

/10.21642/JGEA.020101AF.

7CBOusedtheBureauofEconomicAnalysis’sInput-OutputAccountsDatafor2023toestimatethosepriceeffects.See

/industry/input-output-accounts-data.

HonorableChuckSchumer,HonorableSheldonWhitehouse,andHonorableRonWyden

Page8

industry’sproductthereforereflectsproductioncostsnotonlyinthat

industrybutalsoinotherindustries.)Theestimatesoftheeffectsoftariffsonpricesalsoreflectestimatedchangesinpricesresultingfromthehigherexchangevalueofthedollar.

Finally,CBOuseditsbudgetaryfeedbackmodeltoestimatehoweconomicchangesstemmingfromhighertariffswouldaffe